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Analyse the Conservative approach to state intervention after 1979 and outline labours response since 1997

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Introduction

Analyse the Conservative approach to state intervention after 1979 and outline labours response since 1997 The Conservative Thatcherite, new right policies had two general aims as far as state intervention, those two general aims were a free economy (I.e. non interventionism) and a strong state. The Conservatives believed in minimum state intervention and therefore a small public sector. They were arguably the first pre-war government not to follow the first post war consensus. Although in reality the consensus came to an end in 1968 with an IMF bank loan, loaned on condition that there was to be a subsequent reductions in public spending, with the aim of bringing down the amount of money in the economy so as to lower the inflation rate. ...read more.

Middle

The Conservatives either abolished or substantially reduced these subsidies in order to not only minimise public spending but also because they believed that these firms would either have the incentive to become profitable or would go bankrupt. This is a form of Economic Darwinism, I.e. survival of the fittest and because they believed that by working on a smaller profit margin firms would be encouraged to be me competitive. Unwillingness to act as unemployment increased. The Chancellor Nigel Lawson was unwilling to act as unemployment continually rose Nigel Lawson, the Chancellor of the Exchequer from 1983 to 1989 would lower interest rates to produce a spending boom; he would then higher interest rates to curb the rising inflation rate. ...read more.

Conclusion

by lowering interest rates people borrow more money, meaning that there is more money being spent in the economy leading to higher inflation rates.) to the Bank of England which meant that interest rates were now being manipulated purely for economical and not for party political reasons; as governments in the past had always lowered interest rates in the run up to an election to stimulate the economy so that in the short term it appeared in a better light then in reality it was. This has led to long term stability of interest rates consequentially inflation which has increased consumer as well as business confidence leading to high levels of employment as well as low inflation. ...read more.

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