Stop-Go economics under Macmillan

Macmillan 'you've never had it so good speech'. in the speech, Macmillan acknowledges that there is significant affluence within Britain at this time, but understands that it may not last.

the growth in wages was outstripping the increase in production and this brought inflation. 

the conservative government had to get control and balance the economic boom to prevent a bust or deflation.

the conservative government was to introduce a 'stop-go' economic policy when outputs get too high, controls were put in place such as higher bank interest rates to promote saving money and freezing public sector wages. When demand decreases and the economy cools down the controls are removed, leaving the economy to increase again.

however, stop-go caused problems with Britain's trade. although higher prices had created a large internal consumer demand, it did not encourage manufacturers to increase their export trade. This is because individuals within Britain were now becoming wealthy…

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