economy

1918

  • War debt of £850 million to the USA

  • Expectation that war would be short-lived meant high spending, total cost was £3.25 billion

  • Textile, steel and coal industries experienced loss of custom due to low ability to supply during the war

  • U-boat blockades meant merchant shipping was heavily reduced

  • Negative balance of payments

Post war boom and bust 1918-20:

  • Limits on consumer spending meant people saved up during the war

  • 1919 — increased spending on luxury items like coffee, clothes, cigarettes and soap

  • ‘Speculative’ boom that caused businesses to issue shares valued £65 million at 1918 and £384 million by 1920

  • Investors chose to invest into companies for cotton, coal etc, which Britain would soon lose monopolies over

Government was unable to balance rebuilding industry and paying loans. Lloyd George-Bonar law passed to make borrowing too expensive for most, in an effort to stabilise economy

  • Overseas trading goes into decline

    • Japanese textile industry supplied cotton and silk to India and SE Asia

    • Coal industry in USA lead to loss of jobs in Yorkshire and Northumberland

  • Lloyd George increased pay and changes to 8 hour day so that workers in heavy industry don’t strike

    • No increase in productivity meant prices on goods increased, off-putted overseas markets

attempts to resolve recession 1921-29

  • LG was desperate to help wc/mc so they didn’t shift from liberal party

  • Tax cuts and less gov spending imposed to increase disposable income

  • Coalition chancellor Baldwin introduces economic policy ‘retrenchment’ (I have no idea what this is)

  • Geddes axe 1921 —cuts to public expenditure of £87 million in 1922-23

    • Military, health, welfare and housing budgets slashed

  • Tariffs and protectionism meant imports were heavily taxed and made Britain’s industry even less productive

  • Devaluation vs gold standard 1925: £1 = $4.50, off putting to trade with, removed from gs in 1929

    • Wall street crash 1929, stock exchange collapses and unemployment up by 2.5 mil by 1930

    • 60% of textile, 50% of steel, 40% of coal industry all unemployed

economic challenges 1951-79

Churchill 1951-55:

  • Rationing 1954 — end of rationing to encourage spending and economic growth

  • Public works — Churchill supported the consensus for full employment by creating jobs in public works

    • Unemployment was kept at lowest of 300,000

    • Deepening expectation for gov assistance and commitment to helping people

Eden 1955-57:

  • Stop-go economics — when there’s an increase in inflation, interest/tax rates are raised so that people stop borrowing and economy slows down

  • Decolonisation — end of empire, colonies costed too much money to govern, foreign rivals already dominated trade to British colonies so they weren’t as valuable at bringing money in

Macmillan 1957-63:

  • NEDDY — institution for discussing economy and cooperation between unions, unable to enforce legal control so gov hoped they would agree voluntarily to each other

  • NICKY — more strikes in 1950s so set up as a council for economists/industry experts to give guidance to employers on pay rises, mostly ignored by unions

Wilson 1964-70:

  • IRC — offered loans to companies that were more efficient and suggested mergers should be formed but most ended in failures and British Leyland cars were known for being poor qualities

  • Devaluation — pound was reduced from $2.80 to $2.40 to help the economy

Heath 1970-74

  • Public cuts — cuts to council house subsidies and free school milk, higher charges on prescriptions which was believed would reduce tax burden and stimulate economic growth

  • OPEC oil crisis — spike of inflation and price rises caused by oil crisis due to Arab oil embargo that stopped supplying to countries that supported Israel, pay cuts used to help economy but caused unrest from unions

Callaghan 1976-79

  • IMF loan — international monetary fund to help countries, Britain accepts loan of $4 billion and had to agree to $3 billion spending cuts to prove they could pay it back

  • Monetarism — philosophy that tight rein of economy can prevent inflation, proposed less regulations for struggling industries with privatisation and reduction in state’s role on economy

managed economy to monetarism

War ministries:

  • Gov organised economic offices after the war

    • Ministry of food — rationing

    • Ministry of war production — munitions

    • Ministry of aircraft production — 10 year rule 1919 (assume war won’t happen for the next 10 years so cuts to defence spending)

Military spending:

  • $4 billion debt with USA

  • $70 million interest daily

USA lend-lease:

  • America supplied Britain with: aircrafts, munitions, tanks, liberty ships, raw materials (coal, oil, timber)

Marshall plan:

  • Accepted $2.7 billion in loans to avoid communism

Nationalisation under labour:

  • 1942 Beveridge rep. for fixing squalor, unemployment and gives subsidies when required

  • Coal, bank, transport, electricity, gas, iron and steel are all nationalised under gov control