Economic crisis and recovery

Lesson objectives K: The economic policies of the Labour Government from U: How Britain avoided economic collapse by B: Measure the extent of the success of these policies.

Learning outcomes All will be able to identify and describe a number of economic policies from (D) Most will explain which were successful and why (C-B) Some will be able judge how much success was due to the government’s policies and how much was due to external factors (A)

Starter Setting the context: Add notes to your scales chart

Read Economic crisis and recovery sheet Using text book pgs 126-7, match the policy with the description 10 mins

The British Economy, Success Failure Using the information from the following slides – plot where you think the economy stands. Add labels and annotations to explain the position.

Dec 1945, J M Keynes negotiated a loan of $3700m payable over 50 yrs. We had to pay interest on the loan Also had to dismantle imperial preference and open the empire’s markets to US goods Canada lent $1500m on easier terms These loans meant that the govt had funds to buy essential imports but the loans were used up quicker than expected

1947 Bad winter Fuel crisis (coal shortages) American loans running out Convertibility – most overseas investors wanted to be paid in gold or US dollars but there were not enough dollars in the Bank of England to do this Hugh Dalton’s (Chancellor) “Annus Horribilis”

1948 Marshall Plan aid More generous terms from US than the 1946 loan Played a crucial part in Britain’s economic recovery Exports up by 80% between By 1950 volume of exports 50% higher than 1937 Lack of competition from Germany and Japan

1949 Recession in US Reduced demand for British exports Balance of payments crisis £ devalued against the $ British exports made considerably cheaper so greatly reduced the trade deficit between imports and exports Balance of payments in surplus by 1950

1950 Korean War South Korea (backed by UN) invaded by North Korea (communist) Labour govt embarks on a rearmament programme which requires more imports Import prices for raw materials rise Govt keep interest rates, inflation and wage rates low Agricultural productivity rises Old staple and newer industries in full production

1951 Nationalisation carried out 20% of the economy under state control Coal and railways still run down and in a bad way Full employment maintained from Economic recovery spread across the country Marshall Aid no longer needed Recovery driven by exports

Plenary: Judgement questions How far was economic recovery due to government policies or external factors? Govt policies External factors