How did governments face the economic challenges of the 1950s and 1960s?

Learning objective – to be able to explain the government economic strategies of the 1950s and 1960s. I can describe some of the key features of the British government’s economic policy of the 1950s and 1960s. Grade D I can explain the impact of the British government’s economic policy of the 1950s and 1960s. Grade B I can explain and assess the economic performance of the British government of the 1950s and 1960s. Grade A

‘Butskellism’ – the dominant economic approach of the 1950s and 1960s The 1951-64 Conservative governments largely accepted Labour’s post war welfare reforms and approach to managing the economy along Keynesian lines. Both parties accepted the commitment to full employment and a mixed economy. Such was the closeness of the economic policies of Labour and Conservative governments of the 1950s, The Economist coined the phrase ‘Butskellism’ to describe this consensual approach. ‘Butskellism’ came from the names of the Conservative Chancellor, R. A. Butler, and the Labour leader, Hugh Gaitskell.

‘You’ve never had it so good’ – the illusion of affluence The 1950s was seen as a period of affluence with increased consumer spending. This increase was based on the ability for people to borrow money to spend. This had significant consequences – Growth in inflation. Increase in imports which led to an imbalance in balance of payments.

What was stop-go economics? The Conservative governments of 1951-64 encouraged this growth in consumer spending by relaxing laws on borrowing and credit. However, when the problems of inflation and import prices became serious, controls to slow the economy down, through raising taxes and interest rates, were put in place. This inconsistent policy towards economic growth was called ‘stop-go economics’ and demonstrated that controlling unemployment and inflation was impossible.

What was corporatism? It was clear in the 1950s that Britain was lagging behind its world competitors in terms of economic growth. Macmillan’s 1957-63 government decided to follow a corporatism policy – a managed economy uniting labour, management and government through corporations to plan and achieve economic goals. NEDDY – The National Development Council and Office. This provided a platform for management and unions to co-operate with each other and work towards shared goals. This had no legal control. NICKY – the National Incomes Commission. To combat increasing lost working days and pay demands, NICKY was an advisory body for unions and management on what the government considered fair demands.

What was stagflation? By 1964, the key economic problem was it was in a period of stagflation – where the economy is in stagnation and coping with rising inflation. The key causes of stagflation by 1964 were – Increased consumer spending lead to more imports which led to a balance of payments deficit leading to threat to the value of the pound. Increased borrowing from the IMF. Rising unemployment.

Task Stick a copy of this comic strip on a piece of card and annotate it by adding relevant details beside each panel. Use the PowerPoint presentation to help you.

Home learning task Pair up with another member of the class. Here are two events that relate to the British economic policy of the 1950s and 1960s. Between each pair, choose who is going to research which event. Devaluation of the pound in 1967. Stop go economics. Your task is to produce a one page summary of the events using bullet points and divided by sub-headings. This is to be exchanged with your partner next lesson.