How important were the policies of the National Government in bringing about economic recovery in Britain in 1931 to 1939?

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How important were the policies of the National Government in bringing about economic recovery in Britain in 1931 to 1939?

The National Government had moderate success in bringing around economic recovery in Britain during the period 1931-1939. The policies put in place by the National Government alone were not sufficient in tackling economic recovery. Many other factors were vital during the period of recovery.

The National Government put in place several key policies that were vital in the recovery of Britain. One of the major factors that aided Britain’s recovery was the lowering of interest rates to 2% in 1932. This was beneficial in the recovery for several reasons, the lowered rates resulted in an increase in real wages. This meant that people had more money than before and were able to invest in new goods such as cars. The low interest rates also created “cheap money,” the idea of this capsulated the public and lead to many people taking out loans and mortgages. This new wave of prosperity meant that people were spending more and increasing product demand, which in turn stimulated the economy within industries leading to a higher demand in staff, which led to lower levels of unemployment. Although this cycle of prosperity was instigated by the National Governments policy it wasn’t the sole cause of the growth in consumerism. Prices had already been in decline before due to a lack of consumer demand. However, if it hadn’t been for the lowered rates it may have taken several more months or years before there was growth in consumerism, which would revitalise industry.

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A further policy put in place by the National Government was leaving the Gold Standard. The Government had originally gone back to the Gold Standard in 1925 after the First World War, as it had been used during a period of prosperity in Britain so it was seen as a successful method to relieve economic problems within Britain. The National Government cut its ties with the Gold Standard in September 1931, this allowed the pound to depreciate in value. As a result British exports were made cheaper and more goods were sold internationally. Nevertheless, its effectiveness was limited because ...

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