British economy notes 1951-2007

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British economy notes 1951-2007

1951 – 59:

·         The conservative government where lucky in its timing, coming to power just as economic recovery started to show

·         From 1952, most economic indicator pointed upwards

·         Men’s weekly wages where increasing

·         There was a boom in house and car ownership

·         There was construction of over 300,000 homes per year

·         The new towns planed by labour in the 1940s

·         Food rationing completely ended in 1954

·         There was an increase in the ownership of consumer goods

·         In the run up to the 1955 election butler was able to boost conservative election prospects with a ‘give away’ budget that provided the middle classes with £134 million in tax cuts

·         In the summer of 1957 there was a major financial crisis

·         Inflation was rising because wages were running far ahead of productivity

·         There was also a run on the pound, with the danger the pound would devalue against the us dollar

·         Macmillan favoured expansionist economic policies

·         This crisis did not do lasting damage to Macmillan’s position, which had improves dramatically by 1959

·         The pound regained its value against the dollar

·         The economy expanded so much that the budget of April 1959 provided tax cuts of £370 million

·         The general air of consumer affluence reflected in the budget is generally accepted as the key factor in Macmillan’s comfortable re-election in 1959

1960 – 1963:

·         The age of affluence did not come to an end in the early 1960s but the government faced difficulty and frustration in its economic policies

·         Hopes of radical modernisation of the economy never really occurred

·         The intended transformation of Britain’s infrastructure made stuttering progress

·         By the late 1950s, it was becoming clear that economic growth in Europe was leaving Britain behind and that trade with the empire and commonwealth was not sufficient to keep up

·         Macmillan reversed his party’s previous policy and decided that it was essential for Britain’s economy to be joined with Europe’s

·         In 1959, Britain took the lead in forming the European free trade area but the new organisation was not able to match the economic growth of the EEC

·         In 1961 the Macmillan government submitted Britain’s application to join the EEC

·         3 key economic factors where behind the application:

o   Boosting industrial production for a large scale exporting market

o   Increasing industrial efficiency because of competition

o   Economic growth would be stimulated by the rapid economic expansion already racing ahead in the EEC

·         The 1961 application was a symbol of the sense of failure in bringing about economic modernisation

·         The British economy was still growing and living standards were still going up – but the cycle of ‘stop-go’ economics had not been broken

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