Conservative economic policy 1957 - 64

• After WW2 Britain had instead repaired its decrepit Victorian infrastructure which couldn't compete with Germany, Japan and France who’d rebuilt
• They continued butlers main policy :

  • Operate a mixed economy
  • Follow a loose form of Keynesianism
• what did butlers policies want to avoid?

  • The extremes of inflation and deflation by a series of adjustments to meet problems
  • inflation was seen as the biggest threat to economic stability
• what were the series of adjustments?

  • raising interest rates to discourage borrowing
  • increasing import controls to limit purchases from abroad - reduce trade gap
• Budget Politics 


  A common arguement was that short term economic policy was used to buy votes close to an election
• Give an example of budget politics

  -1959 budget - Derick Heath-coat Amory introduced a range tax cuts when high inflation would’ve been better tackled by financial restraint - led to increased consumer spending and higher inflation and wider trade gap

  • Faced with this he placed significant tax increases and cuts in public spending
• 1964 election

  • Deflationary policies remained until 1963 when to gain lost popularity MacMillan returned to an expansionist policy - taxes and interest rates lowered
  • Led to spending on Foriegn goods as British stocks couldnt match sharp increase
  • Result = Balance of payments deficit = $800 million
• What was the balance of payments deficit in 1964

  $800 million
• Stop - Go 


  Britain lacked any real economic strategy

  • Government adjustments wasnt integrated plan
  • Policy lagged behind events
  • Failure of long term consistently performing economy
• Stagflation

  Compound of stagnation and inflation

  • Industry declines but inflation persists
  • Difficult part of government planning - events dear boy event
• 1958 - MacMillan chooses monetarism and thorneycroft and Enoch Powell resign as post war consensus continues
• Why did Britain have such a a law industrial growth rate?

  • Heavy defense expenditure
  • Maintained costly military and naval bases
  • Expensive nuclear arms development programme
  • The ones developing faster hadn’t these burdens
• by 1964 how much was being spent on defense?

  $1.7 million and 10 percent of the GDP
• 800k unemployed by 1962

  • led to strikes
• 1961 pay pauses hit nurses who were already the poorest
• Whilst economy is bad people favour opppsotion
• Post war economics prosperity with end of rationing
• Never had it so good
• Full employment in 1955
• men’s wages doubled
• Car 500% increase in ownership
• 300k houses built
• material prosperity was rising but not competing internationally