The Making of Modern Britain 2- Economic Developments 1955-64

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What did Britain look like in 1951?
Festival of Britain was held to showcase Britain and we had 22.5% of world trade (exports of manufactures).
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How many major inustries had been nationalised?
14 major industries had been nationalised. Unemployment was 253,000 in 1951.
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At what level was income tax?
Basic rate of income tax at almost 50%
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New schools, universities and hospitals bby 1964.
By 1964, 6000 new schools and 11 new universities had been built but very few new hospitals built.
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What did Rab Butler think of nationalisation?
“Nationalisation has proved itself a failure which has resulted in heavy losses to the taxpayer and the consumer".
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When Rab Butler was Chancellor, what did he want to achieve?
Determined to improve Britain’s balance of payments, maintain full employment and control inflation
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In what ways did Conservative's have timing on their side when coming to power in terms of the economy?
Came to power just as the beginnings of the post- Second World War economy recovery was beginning to show through.
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What was the economy like in the 1950's?
Pattern was one contuined economic improvement.
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When did petrol rationing end?
May 1950. But returned 5 months after the Suez Crisis.
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When did food rationing end?
July 1954. Shortage on meat, butter and sugar meant govt had to ration to stop them running out.
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What did the higher standard of living do for the birth rate?
Swift acceleration which led to fast growing birth rate. by 1961, there were 51 million people, which was 5% more than 1951.
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How was the employment levels?
full employment with less than 1% of the workforce unemployed. This had been triggered by a booming global economy (recovered after WW2) and increase in overseas trade.
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As well as the numbers were growing in traditional occupatios, where else were they growing?
Huge expansion in electrical and engineering works, and more jobs in industries such as cars, steel and other metals.
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How many people were employed in service industries by 1960?
5 million people, which is 1 in 5 of the popn.
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What did economic growth and low unemployment cause?
Rising wages and most people emjoyed a spectacular rise in income.
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How did Rab Butler boost Conservative votes in the election?
A 'give-away budget' which provided the middle class with £134 million in tax cuts.
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Those adults who had been deprived during the war now had the money to spend on...
cars, new appliances, luxuries and new entertainment.
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Why wasnt the economic pciture as positive as made out to be?
The growth of wages was outstripping the rate of production and this brought inflation.
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What task was the Conservative government plagued with?
How to maintain growth and employment at the same time as well as keeping prices steady.
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What was inflation?
when there is an increase in the price of good and services and happens when the people have more money to spend than the goods available.
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How did the government try to control the economy?
Controls had to be used to curb excessive inflation and taxation remained high, both to control excessive spending that would lead to unwanted increase in imports and to pay for the rising costs of public services.
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What was this pattern called?
'Stop-go'economics.
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How was a balance of payments deficit created?
Higher salaries did not encourage manufactors to increase their export trade which would have helped the export industries. This creates a trade deficit.
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What else did stop go do negatively for the government?
inflation leads to stagflation
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What was stagflation?
Industry was declining but inflation still persisted
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What did US pressure over Suez crisis expose?
Britain's financial weakness. Started a run on the pound?
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What was a run on the pound?
The rapid fall in the value of the pound in international currency markets.
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What did Peter Thorneycroft believe in?
Macmillan's chancellor believed in monetarism, which menat limiting wage increases and cutting the money supply.
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Why were other ministers, who were one-nation conservatives e.g. Iain Mcleod against this?
As it would lead to increased unemployment and cubacks in housing.
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What did the row over monetarism symbolise?
The problems of stop go economics.
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Which side did Macmillan side with in the end?
Those who wanted to keep up the expansionist economic policy. (Those against monetarism).
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Thorneycroft propsed drastic spending cuts in 1958, what did Macmillan do?
Overulled them. Thorneycroft resigned, together with Enoch Powell and Nigel Birch.
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What did this mean for post-war consensus?
It had remained firmly in place.
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However, did this do damage to the popularity of the Conservatives?
No, didn't do any lasting harm and their popularity dramatically improved by
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What did Macmillian think of the resignations of Thorneycroft and Powell?
'A little local difficulty'
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How did the sterling change?
Gained in value against the dollar.
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What is shown though the economy's huge expansion?
The Budget of April 1959 provided tax cuts of £370 million.
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How was the economy shown in the election of October 1959?
The genral air of consumer affluence reflected in the budget is generally accpeted as Macmillan's comfortable re-election.
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What was Macmillan's saying about the affluent society?
'Britain had never had it so good'.
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How was the economy during 1960 and 1964?
Continued to grow and was at it's peak around this time.
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But what was the negative of the economy?
Economy became further trapped in the cycle of 'stop-go' policies to gain economic stability.
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What did the government have to do in 1961 to stop the economy overheating?
Introduced a 'pay-pause' to hold down inflation. Also had to ask the IMF for a loan.
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What did the economic growth of Europe mean for Britain?
Left Britain behind. Trade with the Empire and Commonwealth was not enough.
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What did Macmillan then decide to do?
Decided it was essential for Britian's economy to be joined with Europe's.
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In our application of the EEC, were we accepted?
No. the 1961 application is seen as a symbol of failure in bringing about econmic modernisation.
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What did Selwyn LLoyd, Macmillan's chancellor, do to address this?
Set up the National Economic Development Council (NEDDY).
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What did NEDDY consist of?
Government representatives, academics, employers and trade unionists. Made responsible for long-term planning.
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When was NICKY set up?
1962.
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What was NICKY's aim?
A National Incomes Commision, to keep an eye on wages and prices.
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Britain's application to join the EEC in Jan 1963. Were we accepted?
No, we were rejected. A serious stepback in Macmillan's economic policies.
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What was the Beeching Report 1963?
Part of a review of cutting expenditure. Recommended massive cuts to Britain's rail network. A closure of 30% of the rail network. Public outrage.
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What did the Beeching Report mean for rural communities?
Hundreds of railway line and thousands of station closures, caused fundamental social change, and rural areas isolated.
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Reginald Maudling, the new chancellor, psuhed the ecnomy into 'go'. How?
Lowered the bank rate to encourage consumer spending.
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What did this do for the growth rate?
Rose from 4% in 1963 to nearly 6% in 1964.
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What about the BOP?
Exports rose to just over 10% betwen 1961 and 1964. Imports remained 20% higher.
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Card 2

Front

How many major inustries had been nationalised?

Back

14 major industries had been nationalised. Unemployment was 253,000 in 1951.

Card 3

Front

At what level was income tax?

Back

Preview of the front of card 3

Card 4

Front

New schools, universities and hospitals bby 1964.

Back

Preview of the front of card 4

Card 5

Front

What did Rab Butler think of nationalisation?

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Preview of the front of card 5
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