Major economy Flashcards Preview

A Level History > Major economy > Flashcards

Flashcards in Major economy Deck (10)
Loading flashcards...
1
Q

What was unemployment in mid-1991 and early 1992?

A

1991- 1.6 million

1992- 2.6 million

2
Q

What caused inflation pre-‘92 election?

A

Election looming had to increase public spending
High unemployment meant more spent on benefits
Subsidies given to transport
Increased NHS spending to borrowed money
All lead to increased inflation

3
Q

Pre-‘92 negative equity

A

Having to repay mortgages worth more than the current value of their houses, many houses repossessed

4
Q

Why was it a shock that Tories won ‘92 election, despite economic situation?

A
Recession hit middle class Tory voters
Shows that despite this, public still didn't trust Labour w/ economy and abolition on Poll Tax (cost £1.5 bil) proved popular policy
5
Q

What was Black Wednesday?

A

Few months after election, govt. faced economic crisis and forced to leave Exchange Rate Mechanism

6
Q

Why did Britain join ERM in first place?

A

Joined in ‘90 to combat inflation + B £ had to be tied to fixed exchange rate
2.96 German Marks to the £ with very little room for fluctuation

7
Q

What caused Black Wednesday?

A

Sept ‘92 £ under pressure and govt. determined not to devalue or leave ERM
But as £ decreased further, Lamont announced live in TV that B were leaving ERM

8
Q

What were the impacts of Black Wednesday?

A

Not as bad as initially thought, economy quickly re-established and inflation + unemployment decreased
Tory reputation damaged, Major criticised + Labour shot ahead in polls
Some saw this as ‘beginning of the end’ for Major

9
Q

What was the economy like after Black Wednesday?

A

Interest rates no longer kept high to protect £ value so ^ in borrowing, entrepreneurship + investment
Exchange rates decreased helping BofP
US economy coming out of recession- expansion of world trade
Business continued to grow due to Thatcher’s deregulation

10
Q

What was the economy like by 1997?

A

Booming, productivity, consumer spending and car ownership all ^
Negative equity disappeared
Ppl reluctant to credit Major for this despite inheriting a weak economy yet leaving when it was booming