War forced a £4700m rearmament
Exports up rapidly, and the Govt reduced restrictions on imports - balance of payments crisis as imports needed to meet rearmament demands. Offset economic recovery. Devaluation of £ meant imports were more expensive, so as Britain heavily reliant on imports costs rose.
Wage demands increased, loss of confidence from investors forced to reinstate import controls. Mismanagement impression given
Korean War also reasons for income tax rises, party divisions
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