economic 1964-70

1964 trade deficit

£800 million deficit inherited from conservatice

devaluation date

18th nov 1967

devaluation amount

• pound devalued against dollar by 15%

• each pound worth $2.40 rather than $2.80

devaluation consequences

• callaghan resigned, replaced by jenkins

• by-election dwings of up to 18%

• reduced defence spending and withdrawal east of suez

• blamed unions because of strikes

devaluation 1967

• wilson asked international monetary fund for another loan to add to 1964 loan

• 7 weak seamen strike

• aim was to try and make british goods cheaper to buy against american goods

• private sector made substantial profits during labour rule, public sector which was failing

uk balance of payments 1964

balance in private sector: -78

balance in public sector: -666

uk balance of payment 1967

balance in private sector: +332

balance in public sector: -793

uk balance of payment 1969

balance in private sector: +1326

balance in public sector: -924

devaluation overview 1964-1966

• government tries to stabilise sterling by releasing money into markets, running down britians reserves

• interest rates are raised by 2% and sterling steadies

• central bankers from 11 nations offer $3 billion to balance sterling

consequences of weak economy

• wilson applies for EEC- wilson opposed by conservatives and liberals and opposed by 36 labour MPs

• french vetoed application again

1967 wilsons chancellor

roy jenkins replaced callaghan as chancellor

jenkins as chancellor 1967-70

jenkins tries to stabilise government:

• taxes were raised

• government spending cut to improve balance of payments

1969- jenkins created a balance of pay with surplus cash

1962- 60% of people how favourable views of unions

inflation rate in 1967

inflation at 12%

in place of strife

• barbara castle- employment minister planned to use law to limit unofficial strikes

• 1969-white paper document released

• june 1969- TUC negotiated compromise but was really a humiliation

white paper document 1969

• 28 days cooling off period before strike

• strike ballots imposed

• industrial relations court would be able to prosecute people who broke the rules

reasons for joining EEC

• would help strengthen british economy

• would build Euro-Britian relationship

• wanted to avoid devaluation

• increase trade

reasons against joining EEC

• prevent britian from following socialist policies

• would cause labour divisions

• labour (left) e.g micheal foote and barabra castle and trade unions were hostile

• 1967: de gaule vetoed application because he didnt agree with britians relationship with U.S

Gaitskells view on EEC

• fought against britians application

• opposition based on fear that EEC was the first step toward a federal political union

europhiles

• Roy Jenkins

• George Brown

Euroskeptiks

• gaitskell

• barabara castle

• micheal foote