Minh Pritchard History Margaret Hill
How successful was the national government in dealing with problems that it faced?
The national government was formed in 14th August 1931 as a temporary way to govern. The national government was brought about in an extreme financial emergency to balance the budget and keep the currency. Increase taxation, lifting the standard rate of income tax by 2.5% managed to balance the budget and negotiate loans but forced Britain off the over valued gold standard when the pound fell from $4.86 to $3.40.
The national government was formed to combat the great depression. Between 1931 – 35 economic issues were at the forefront of policies. There were four main features to the government’s economic strategy. The first expenditure cuts, there was 10% reduction in unemployment benefit and government controlled salaries and the devaluation of the pound. Britain went off the gold standard in September 1931, and the pounds value fell by 20% compared to other currencies. However a weaker pound meant that British exports were cheap and therefore more competitive, the government then tried to keep the financial market deliberately low. Interest rates were lowered from 6% to 2% this encourage encouraged expansion of private enterprise as the population were more willing to borrow money when repayments were low. Protection was also another policy in which free trade would be scrapped and protection introduced to keep British industry.
