1951- 64 Economy
-AGE OF AFFLUENCE- (Golden Age)
Early 50s Marshall aid caused an uplift in the economy (could be argued as starting the process of Keynesian
economics).
1951 population at 49 million, 1961 population 51 million- growth by 2 million due to BABY BOOM after WWII.
1951- 61 wages increased from £8.30- £15.35
1954- food rationing ended
1954- housing minister Macmillan fulfilled the challenge of building 300,000 homes (in fact building 354,000).
1955- only 200,000 (1%) of the workforce wasn’t working- FULL EMPLOYMENT. 1930’s unemployment was at 13%
1955- Butler was able to boost Conservative election prospects by a ‘give away’ budget of £134 million.
Huge expansion in electrical and engineering working and more jobs in industries relating to cars, steel and other
metals.
Service industries (financial and professional services to transport and sales were growing) employed 5 million by 1960-
1 in 5 of the population.
1958- Britain importing 29% more goods.
Although Britain experienced in increase in growth rate this didn’t mean that was better than other countries. France
and West Germany exceeding Britain.
1959- Britain’s industrial production 129, West Germany’s industrial production 225.
Late 1950’s period of affluence with adults who had grown up during the war not experiencing a notable difference of
rising living standards, better housing, low unemployment and more money to spend on luxuries.
Conservative’s adopted Keynesian economic policy as a result of the post- war consensus.
Stop- Go Economics
– Growth in wages was increasing more than the rate of increase in production.
– Conservative government was faced with trying to maintain growth and employment whilst keeping prices steady at the
same time.
– Macmillan believed in appealing to industry and the public “What we need is restraint and common sense- restraint in
the demands we make and common sense in how we spend our income”.
– The government adopted Keynesian economic policy which involved high state intervention.
– Stop- go economics is a form of Keynesian economics which involves high state intervention when the economy is in
decline (STOP) with high interest rates and wages freezes, and increase in demands, rising imports, low interest rates
when the economy is in a GO phase.
– Stop- go economics means that although the booms aren’t as high, the busts aren’t as low.
– Many argue that the nature of stop- go economics is unhealthy and prevents a natural economy from emerging.
– The debate of stop- go economics can be identified in 1958 between Thorneycroft and McLeod. Thorneycroft argued for
a monetarist policy to be adopted where the economy was left alone and small investments introduced once a year to
establish a natural cycle of economy emerging. It wouldn’t protect lame- duck industries but booms would be higher.
McLeod advocated Keynesian economics where high levels of state intervention in the economy would occur to help its
growth and support industries. Once the industries were established the government would tax them and would pay
back the debt it got from supporting the industries in the first place.
– Macmillan sided with McLeod in continuing expansionist policy and Thorneycroft resigned along with Powell and Birch.
R.A. Butler
Continued to maintain full employment whilst economic growth.
Expanded the Welfare State.
Committed to heavy defence spending and the establishment of nuclear weapons
Butler did prefer interest rates to government intervention and taxation as a way of keeping inflation down. Contrary to
Gaitskell’s belief in government intervention and taxation
1952 Butler proposed cutting the pound free from the Bretton Woods exchange policy which was on the same lines of
monetarism and free market and is called Operation Robot. Churchill rejected it
1955- Butler gave £134 million ‘give away’ tax cuts
Macmillan’s Chancellors:
-Macmillan-
– Didn’t do anything about sluggish growth in the economy and continued Butler’s Keynesian policy.
-AGE OF AFFLUENCE- (Golden Age)
Early 50s Marshall aid caused an uplift in the economy (could be argued as starting the process of Keynesian
economics).
1951 population at 49 million, 1961 population 51 million- growth by 2 million due to BABY BOOM after WWII.
1951- 61 wages increased from £8.30- £15.35
1954- food rationing ended
1954- housing minister Macmillan fulfilled the challenge of building 300,000 homes (in fact building 354,000).
1955- only 200,000 (1%) of the workforce wasn’t working- FULL EMPLOYMENT. 1930’s unemployment was at 13%
1955- Butler was able to boost Conservative election prospects by a ‘give away’ budget of £134 million.
Huge expansion in electrical and engineering working and more jobs in industries relating to cars, steel and other
metals.
Service industries (financial and professional services to transport and sales were growing) employed 5 million by 1960-
1 in 5 of the population.
1958- Britain importing 29% more goods.
Although Britain experienced in increase in growth rate this didn’t mean that was better than other countries. France
and West Germany exceeding Britain.
1959- Britain’s industrial production 129, West Germany’s industrial production 225.
Late 1950’s period of affluence with adults who had grown up during the war not experiencing a notable difference of
rising living standards, better housing, low unemployment and more money to spend on luxuries.
Conservative’s adopted Keynesian economic policy as a result of the post- war consensus.
Stop- Go Economics
– Growth in wages was increasing more than the rate of increase in production.
– Conservative government was faced with trying to maintain growth and employment whilst keeping prices steady at the
same time.
– Macmillan believed in appealing to industry and the public “What we need is restraint and common sense- restraint in
the demands we make and common sense in how we spend our income”.
– The government adopted Keynesian economic policy which involved high state intervention.
– Stop- go economics is a form of Keynesian economics which involves high state intervention when the economy is in
decline (STOP) with high interest rates and wages freezes, and increase in demands, rising imports, low interest rates
when the economy is in a GO phase.
– Stop- go economics means that although the booms aren’t as high, the busts aren’t as low.
– Many argue that the nature of stop- go economics is unhealthy and prevents a natural economy from emerging.
– The debate of stop- go economics can be identified in 1958 between Thorneycroft and McLeod. Thorneycroft argued for
a monetarist policy to be adopted where the economy was left alone and small investments introduced once a year to
establish a natural cycle of economy emerging. It wouldn’t protect lame- duck industries but booms would be higher.
McLeod advocated Keynesian economics where high levels of state intervention in the economy would occur to help its
growth and support industries. Once the industries were established the government would tax them and would pay
back the debt it got from supporting the industries in the first place.
– Macmillan sided with McLeod in continuing expansionist policy and Thorneycroft resigned along with Powell and Birch.
R.A. Butler
Continued to maintain full employment whilst economic growth.
Expanded the Welfare State.
Committed to heavy defence spending and the establishment of nuclear weapons
Butler did prefer interest rates to government intervention and taxation as a way of keeping inflation down. Contrary to
Gaitskell’s belief in government intervention and taxation
1952 Butler proposed cutting the pound free from the Bretton Woods exchange policy which was on the same lines of
monetarism and free market and is called Operation Robot. Churchill rejected it
1955- Butler gave £134 million ‘give away’ tax cuts
Macmillan’s Chancellors:
-Macmillan-
– Didn’t do anything about sluggish growth in the economy and continued Butler’s Keynesian policy.
