Wilson 1964-70 ● General tendencies similar to past 13 years.
● Increase of balance of payments defecit.
● Over optimistic target for productivity growth ("National plan")
● Planning came to nothing due restrictive policies and inconsistency in terms of
plan’s targets, these restrictive measures were taken in order to support
sterling and control balance of payments.
● ON THE OTHER HAND: Firstly, Wilson wanted to restore competitiveness, and
used The National Board of Prices and Incomes to control prices and wages,
which reduced inflation.
● Secondly, and most importantly in November 1967 Wilson announced the
devaluation of the pound, which was followed by a period of deflationary
policy in order to provide resources for exports and ensure the success of
devaluation.
● CONCLUSION: Partly a success for Wilson’s government: exports grew rapidly
and the current account went into surplus at the beginning of 1969, however,
growth remained low and unemployment remained high.
1970 - 1974 (Heath) ● Marked by U-turn + high inflation.
● First phase was a period laissez-faire economics, when Heath government
committed to stimulating enterprise and laissez-faire. It was followed by
neutral fiscal policy and there was an attempt to reduce government
intervention in the industry.
● However, when unemployment rose to nearly a million, government
prompted a change in policy aiming to reduce unemployment to 500.000 by
the end of 1973, by expanding output at 5 percent a year. That was a second
phase which successfully reduced unemployment, however it was maintained
by a U-turn and broken promises which was very unpopular within the UK
citizens.
● CONCLUSION: Heath mainly aimed at reducing inflation and he was partly
successful in terms of dealing with it, however his 4 years in power were not
supported by an economic decline and huge dissatisfaction of the people with
● Increase of balance of payments defecit.
● Over optimistic target for productivity growth ("National plan")
● Planning came to nothing due restrictive policies and inconsistency in terms of
plan’s targets, these restrictive measures were taken in order to support
sterling and control balance of payments.
● ON THE OTHER HAND: Firstly, Wilson wanted to restore competitiveness, and
used The National Board of Prices and Incomes to control prices and wages,
which reduced inflation.
● Secondly, and most importantly in November 1967 Wilson announced the
devaluation of the pound, which was followed by a period of deflationary
policy in order to provide resources for exports and ensure the success of
devaluation.
● CONCLUSION: Partly a success for Wilson’s government: exports grew rapidly
and the current account went into surplus at the beginning of 1969, however,
growth remained low and unemployment remained high.
1970 - 1974 (Heath) ● Marked by U-turn + high inflation.
● First phase was a period laissez-faire economics, when Heath government
committed to stimulating enterprise and laissez-faire. It was followed by
neutral fiscal policy and there was an attempt to reduce government
intervention in the industry.
● However, when unemployment rose to nearly a million, government
prompted a change in policy aiming to reduce unemployment to 500.000 by
the end of 1973, by expanding output at 5 percent a year. That was a second
phase which successfully reduced unemployment, however it was maintained
by a U-turn and broken promises which was very unpopular within the UK
citizens.
● CONCLUSION: Heath mainly aimed at reducing inflation and he was partly
successful in terms of dealing with it, however his 4 years in power were not
supported by an economic decline and huge dissatisfaction of the people with
