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What were major problems facing the UK after World War II? What policies did the Government use to resolve these problems? And, how was Britain performing economically?

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Introduction

What were major problems facing the UK after World War II? What policies did the Government use to resolve these problems? And, how was Britain performing economically? The post-war era is a key moment in British economic history. These decades came to be viewed as a golden age. Immediately after the war, all available resources were needed for: the re-conversion from war to civilian production, re-construction of capital stock, and the recovery of living standards. It was important that the decisions made by the Government would help improve the economy, as it was very weak at that time. Some of these decisions, which were in the form of policies, helped better the economy and without them, the economy may not be the way it is today. This essay will explore analyse and the UK economy during the 1960's and 1970's. The major problems, main policy targets and instruments, and overall economic performance will be compared and contrasted over the two decades. The Conservative government were in control of the economy from 1960 until 1964 before the Labour Government were elected in 1964. Similarly, the economy in the 1970's began under the control of the Conservative government until 1974. The labour government then took over until 1979. And finally, the Conservative government were elected again in 1979. The 1960's started with a Balance of Payments crisis in a rather slow-moving economy. ...read more.

Middle

All major oil consuming countries experienced increasing inflation caused by the high oil price rise, it was reinforced in the UK by the depreciation of the pound. In the UK, Prices and Incomes policies became the central policy instrument in the fight against inflation. From 1976, these were added by the new instruments of 'cash limits' on public spending and targeting of monetary aggregates. The manufacturing industry had fallen after 1961 to a low in 1963, however, it did improve and by the end of a decade the industry had increased to a peak. Under the control of the Labour in 1964, the government developed an industrial policy, this was to make the industry more efficient and competitive through government intervention. A National plan was developed to set targets for each industry and help was to be provided towards their achievements. The government created a new department, the Ministry of technology in 1964, and a new agency, the Industrial Reorganisation Corporation (IRC). The Ministry of technology was to bring advanced technology and new processes' to the UK's industry. The IRC was directed by an independent group of businesses men and had �150 million of Exchequer finance to lend or to invest in reorganised industrial units. Another problem facing the 1960's and the beginning of the 1970's was unemployment. Unemployment had been falling since 1959 and was down to 1.33% in June 1961. ...read more.

Conclusion

It also accounted for nearly three quarters of the increase in output over those years. The increase in exports continued throughout the 1970's and by the end of the decade it had reached an all time high. It had exceeded the increase in imports even though they were larger than any other decade. The 1970's was also a decade of policy discontinuities. The biggest change was the failure of the Bretton-Woods adjustable peg exchange rate system in 1972 and its replacement by floating exchange rates. In 1976, the Labour Government required the IMF to meet a large external deficit and to restore confidence in sterling. However, the IMF needed the UK to deflate the economy to squeeze out inflation. But cuts in Public Expenditure ran counter to government commitments to the Trade Unions to expand the Welfare State. This led to an IMF crisis, which in turn led to an intense political debate within the Cabinet. The squeeze on public spending was eased by the gradual expansion of UK's North Sea oil, which generated considerable tax revenues from 1976. Controlling the growth of public expenditure was one of the main policy issues in 1960's but it was not the central concern that it became in the 1970's when the PE/GDP ratio rose from 51% in 1970 to 1971 to 58% in 1974-1975. Workers were asked to treat the increases in the social wage as the equivalent to the cash earnings. The planning aspirations of 1964 Labour government were scaled down in the 1970's. 1 ...read more.

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