Balance of payments issues + stop go policies

what does balance of payments mean?

includes invisible imports and exports (shipping,insurance etc) in the difference between the goods that a country imports and exports

what does balance of trade mean?

the difference between the goods a country imports and exports. if imports are higher than exports = deficit. if exports are higher than imports = trade surplus

what was both of the phases in stop go economics?

stop = high interest rates, wage freezes

go = low interest rates, wage rises

why were there regular balance of payments deficits?

rising consumer demand which increased imports

what evemt exposed Britain’s dependence on the US

Suez crisis

what did Macmillan’s chancellor, Thorneycroft believe in?

monetarist policies - limit wage increases and cut money supply

what did McLeod believe in?

opposed to monetarist policies; would lead to increased unemployment and cutbacks in housing

what started after the Suez crisis in relation to the pound + what does it mean?

run on the pound - rapid fall in value of the pound in international currency markets especially the USD

who did Macmillan side with eventually?

those who wanted an expansionist economic policy

who did Thorneycroft resign with?

Enoch Powell, Nigel Birch

why did Britain decide to apply to the EEC in 1961?

economic growth in Europe left Britain behind e.g. West Germany, problems with stop-go and balance of payments problems

what did Chancellor Lloyd set up?

National Economic Development Council (NEDC, Neddy) responsible for long term planning.

National Incomes Commission (Nicky) keep an eye on wages and prices

what did the 1963 Beeching Report consist of?

massive cuts in Britain’s rail network, closure of more than 30% of the rail network