Supply Side economics

What made the government modify its financial policies?

The severity of the recession.

What was Supply Side economics?

Argued for a return to incentives, people would work harder and more productively if they were allowed to keep more of their earnings.

What were some supply side policies being advocated for?

-Reducing taxation

-Encouraging competition for lower prices

-Limiting trade union powers to not block productivity.

What is deregulation and why did Thatcher introduce it?

A concerted effort to remove the financial and legal restrictions that Thatcher believed had prevented efficiency and profitability in many areas of social + economic activity.

What scheme was introduced for small businesses to borrow money and why?

The Loan Guarantee Scheme, made to encourage start up companies.

What was the Enterprise Allowance Scheme?

Encouraged the unemployed to start up their own business by providing them £40 a week for up to a year to get their business off the ground.

What was Financial deregulation and what did it do?

Financial deregulation was the abolition of credit and exchange controls. This freed up the City of London and the financial markets from the tight controls of the Bank of England.

What was the ‘Big Bang’ and when was it?

27th Oct 1986 which deregulated the stock exchange. Led by the finance minister Nigel Lawson, the reforms modernised the UK's financial sector to compete with global powerhouses in New York and Tokyo.

What did the Big Bang open the door to?

Computer screen trading and replacement of the old boys network with free competition.

What did the Big Bang do to Londons position?

It is credited with restoring London’s position as a world financial centre as foreign banks could now operate as stockbrokers.

What were Yuppies?

People working in cities with large amounts of disposable income. Becoming an iconic image of the 80s.

Did productivity increase and what did Britain move to?

Financial services became one of the UK’s most important export industries. However productivity didn’t increase as much as only 2.2% growth in GDP during the 80s.

What did Financial deregulation encourage and what did it lead to?

Encouraged banks to advance larger loans, this money was then spent on consumer goods from abroad. This led top the BOP deficit going from £16 Billion to £47 Billion between 1980-89.

What was Privatisation?

The selling of publicly owned industries to the private sector?

What industries were privatised in the first term?

Some of British Petroleum in 1979, British Aerospace in 1980. BT in 1984.

What was Popular Capitalism and why did Thatcher do it?

Making ordinary people invest and become shareholders. thatcher done this to try and make the public more Right Wing.

How much did stocks and shares went up by individuals owning it?

Between 1979-90 it went up from 3 million to 9 million.

What was Privatisation driven by?

Anti-socialist ideology.

What else did Thatcherites believe about the private sector?

That the private sector was more dynamic and efficient then the public sector at delivering goods + services.

What were the effects of privatisation for employees?

Although it brought in a lot of revenue. It did make life more insecure for more employees, some lost their jobs as the privatised enterprises cut back on staff, others found that they couldn’t rely on long term job security and pensions.

What did radical Thatcherites want to push?

Further privatisations, including the coal and railway industries and they drew plans to privatise the NHS