Macmillan’s Government: ‘Stop-go’ economics
Year Action Measures
1951-52 STOP! Reason: Korean war caused a rise in the cost of British
imports. Balance of payments deficit 700 million.
Butler
Measure: Introduction of control on credit and import.
Result: Balance of payment surplus 300 million; less
investment in industry; exports falling
1953-54 GO! Measure: Cutting bank rate; encouraging investment;
producing some industrial expansion
Butler
Result: full employment; exports increase; economy boom
April 1956 STOP! Reason: rise in wages and demand for goods=inflation. Too
much import and small export (due to trade union strikes)-
Macmillan
unfavourable balance of payment.
Measure: credit squeeze; tax rises and cuts in government
spending.
Result: good balance of trade
April 1957 GO! Measure: taxes and credit restrictions reduced slightly.
Thorneycroft Result: increase in demand, prices and import.
Sept. 1957 STOP! Reason: Wage demands and strikes, export problems.
Thorneycroft Measure: Credit squeezed and reduced. Suggestion of
holding down expenditure for 58-59 (declined,
Thorneycroft resigned 1958)
Year Action Measures
1951-52 STOP! Reason: Korean war caused a rise in the cost of British
imports. Balance of payments deficit 700 million.
Butler
Measure: Introduction of control on credit and import.
Result: Balance of payment surplus 300 million; less
investment in industry; exports falling
1953-54 GO! Measure: Cutting bank rate; encouraging investment;
producing some industrial expansion
Butler
Result: full employment; exports increase; economy boom
April 1956 STOP! Reason: rise in wages and demand for goods=inflation. Too
much import and small export (due to trade union strikes)-
Macmillan
unfavourable balance of payment.
Measure: credit squeeze; tax rises and cuts in government
spending.
Result: good balance of trade
April 1957 GO! Measure: taxes and credit restrictions reduced slightly.
Thorneycroft Result: increase in demand, prices and import.
Sept. 1957 STOP! Reason: Wage demands and strikes, export problems.
Thorneycroft Measure: Credit squeezed and reduced. Suggestion of
holding down expenditure for 58-59 (declined,
Thorneycroft resigned 1958)
