Economic crises; 1951-1979 - causes and consequences.

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1956 Suez Oil Crisis

CAUSES

  • General Nasser nationalisaed Suez Canal.
  • Britain sought to protect commercial interests, iconic of the empire.
  • Eden was confident that Britain was still an imperial power.

CONSEQUENCES - ECONOMIC

  • Economic crisis - Oil embargo on Britain.
  • Run on the pound.

CONSEQUENCES - POLITICAL

  • Eden was exposed as a poor PM.
  • Revolt led by Macmillan (Chancellor) to climb down regardless of humiliation.
  • America said "no". Eisenhower called for Britain to stand down, pressure from the United States.

1964 £4m Balance of Payments Deficit

CAUSES

  • Reginald Maudling as Chancellor sought to prevent high unemployment. 
  • Sought to achieve this through tax concessions and "expansion without inflation" - key Macmillan policy.
  • This caused a severe balance of payments deficit. 

CONSEQUENCES - ECONOMIC

  • Highlighted Britain's poor performance alongside other western nations; Japan and West Germany.
  • Highlighted the Gov'ts. failure to modernise the economy.
    • Failure of Stop-Go policies: Lacked consistency, providing spurts of economic growth but nothing more.
    • Beeching Axe in response to poor economic performance.
  • Highlighted the failure of Macmillan's "expansionist" policies. 

CONSEQUENCES - POLITICAL

  • Showed Macmillan to be out-of-touch and old. 
  • Highlighted Britain's poor performance within the world economy.
    • Exposed the need for modernisation.

1967 Devaluation

CAUSES

  • Large balance of payments crisis.
  • Seeking to break out of the mould of stop-go - Exchange rate to the dollar was too high. 
  • Prices and Incomes policy to stop inflation (wage fixes) wasn't working. 
  • Docks…

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