The Collapse Of The Old Authority

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In spite of the stop-go policies, the development of demand management as a means of stabilising the economy was seen as vastly effective. Those who thought this were being mistaken. Economist Christopher Dow suggested in 1964 ‘as far as internal conditions are concerned then, budgetary and monetary policy failed to be stabilising, and must on the contrary be regarded as having been positively destabilising’ a bold statement indeed. He described the overheating of the economy in 1960 at least somewhat to over-expansionary policies in the years before. Other more conventional economic policies would have seen smoother growth in the late 1950s as it would of lead to a smaller balance of payment deficits in peak years. Empirical research has…show more content…
He was offering an answer to the stop-go demand management of the Tory years, designed to put an end to Britain’s comparative decline . In its place, Wilson would advance the economy through supply-side reforms that included better education and increased levels of investment in science. Wilson expressed that previous periods of expansion had been difficult to maintain as a result of inflation and balance of payments strains. Harold Wilson welcomes a liberated future. The economy was in a relatively stable position, inflation (4%) and unemployment (1.4%) both moderately low. Productivity growth (4%) was respectable though still below competitors. Nonetheless, there was what seemed to be a persistent problem by now, a balance of payments issue, which had big impacts on the economy. Labour inherited a current account deficit of some £800m. The causes of this substantial deficit were ascribed to a loss of price competitiveness. The change in dynamics of the market had also differed. Britain’s manufacturers found it easy to export and oppose importing in the 1950s as they faced a sellers’ market. Though now, industrialised countries had become more competitive and led to new competition in foreign markets. Improvements in the balance of payments should have been the primary target. However, labour had a greater emphasis on controlling prices in order to restore competitiveness. There was a
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