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Using the sources and your own knowledge, to what extent were the government policies the main reason for sluggish economic growth between 1951 and 1964?

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Introduction

Using the sources and your own knowledge, to what extent were the government policies the main reason for sluggish economic growth between 1951 and 1964? In my opinion, the "sluggish economic growth" in the context of this period would be better termed as "relative economic decline". This suggests that Britain's economy grew 2.5% per year by the 1960s, however, at a rate far slower than its foreign competitors, such as, Germany and Japan. There are many factors that led to "relative economic decline" such as, poor industrial relations, large amounts of money spent on defences, government policies and the most important factor, a decline in industrial productivity. The most affecting factor leading to Britain's economic situation was low industrial productivity. This was caused by a sequence of factors, such as poor management and insufficient technology leading to poor industrial relations and strikes. This negative multiplier effect resulted in poor economic performance and low wages for workers. The low wages further enhanced the problems by increasing tension between workers and managers, which led to a greater frequency of strikes. ...read more.

Middle

Source C agrees with my judgment, "...needed a boom to coincide with an appeal to the country...staged...managed this in 1959". The 'Stop-Go' made the economy unstable and made society richer, which led to an increase in the buying of consumer durables, which increased inflation. Furthermore, in 1951, Churchill's policy to reduce purchase tax saw a dramatic rise in the sale of consumer durables. Moreover, between 1951 and 1955 Macmillan reduced unemployment by providing jobs nationwide through his "National Housing Crusade" to build 300,000 houses per year, which led to a richer society and eventually higher inflation. Another factor which influenced the "relative decline" was the governments high spending on defences. Britain spent a higher proportion of its wealth on defence than most of its industrial foreign rivals. For example, in the 1960s Britain spent 6% of its GNP on defence, compared to Japan who spent a low 1.1%, which is almost one sixth of the expense contrasted with Britain. This choice for heavy spending abroad regularly pushed the balance of payments into red which caused cut backs in domestic expenditure and ultimately added to the "relative decline". ...read more.

Conclusion

Additionally, the Conservatives 'Stop-Go' policy simultaneously caused the stagnation of the economy, as Macmillan's mini-booms before an election ultimately caused poor economic performance in the long term compared to foreign countries. However, the "relative decline" can be justified as foreign countries, such as, Japan were receiving loans from the USA to help their economies recover from World War 2. Whereas Britain had to deal with the post-war austerity alone, whilst simultaneously keeping up with industrial competitors who had had help to be able to concentrate on their industries for longer compared to Britain who had not. On the other hand, Source E indicates the Conservatives were solely to blame because their naivety in wanting to gain an election majority led to the "sluggish growth". "...Tory complacency ensured that...economic growth would never be generated." This suggests to me that the Conservative's believed they could do what they wanted with the economy and that the effects of the mini-booms were not taken into account in the long term. This ultimately increased the underlying economic problems from post-war austerity which accumulated throughout this period. Alicia Fleming 13E British History Mr Kellaway 15/12/03 Sources Essay Words: 1,105 ...read more.

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