THE ECONOMY AND AUSTERITY

• Attlee followed Keynes' (a British economist) approach to the economy which combined both private and state enterprise. Keynesian economics justified government intervention through public policies that aimed to achieve full employment and price stability. However, social programmes were not cheap, and the period was one of austerity with rationing continuing. There was an export issue due to exchange rates being fixed which the voters believed it would make Britain weak.
• In 1949, the government was forced to devalue the pound which although gave cheaper exports it left a bitter taste for voters. Nationalisation of coal mining, railways, road haulage, canals, and cable and wireless (1947), followed by electricity and gas (1948) and steel industry (1951). By 1951 about 20% of the economy had been taken into public ownership allowing significant material gains for workers in the form of higher wages, reduced working hours, and improvements in safe work conditions.