History 7

Thatcher's economic policies 1979 - 1983

By AdamBrewer
  • Government Incomes policy was dropped

    Government Incomes policy was dropped

  • unwillingness to prop up manufacturing production fell by 11%

    unwillingness to prop up manufacturing production fell by 11%

    Partly due to Govt
  • Thatcher agreed to recommendations for increased public sector pay awards

    Thatcher agreed to recommendations for increased public sector pay awards

  • Pensions would be based not on the ‘movement in prices + earnings

    Pensions would be based not on the ‘movement in prices + earnings

    but solely on prices – Pensioners set to get poorer relative to those in work
  • Budget raised indirect taxes

    Budget raised indirect taxes

    (most importantly Value Added Tax VAT) from 8% to 15% but he cut the top rate of income tax from 83% to 60% + the standard rate from 33% - 30% - shift from direct to indirect tax designed to boost incentives by allowing the successful high earners to keep of their income. Interest rates were raised by 14% + these later reached 17% in Nov, rewarding those with large savings, but hurting people with debts. Major relaxation of exchange controls
  • Employment Act

    Employment Act

    made secondary picketing illegal but didn’t make ballots compulsory or ban sympathetic strikes. All new closed shops (i.e. union only Labour in an industry) had to be approved by a 4/5 of those affected + public funds were made available to encouraged unions to hold postal ballots.
  • Budget

    Budget

    large pay awards for police + army
  • Inflation of 22%

    Inflation of 22%

    up from Labour figure in 1979
  • falling orders for manufactured goods

    falling orders for manufactured goods

  • Productivity increased.

    Productivity increased.

    Amongst those still in work.
  • Unemployment rose to 2.7million

    Unemployment rose to 2.7million

    the highest since the depression of the 1930s
  • Manufacturing production was declining

    Manufacturing production was declining

    fell by 14% 1980-81, partly caused by this govt. policy unwillingness to intervene
  • economic recession

    economic recession

    wave of riots across inner-city London, Liverpool, Manchester, Leeds + Bristol
  • Budget

    Budget

    25p lower rate of tax introduced by Labour in 1978 was abolished
  • Public expenditure continued to rise.

    Public expenditure continued to rise.

    Reachrf4.5% of the gross domestic product (GDP) in 1982, largely as a result of the huge increases in the number of those receiving unemployment benefit
  • Thatcher’s continuation in office threatened.

    Thatcher’s continuation in office threatened.

    Opinion polls showed the Prime Minister’s personal popularity + that of her govt. had declined significantly
  • Employment Act

    Employment Act

    provided compensation from public funds to people dismissed from closed shops. It also made ‘union labour only’ requirements in contracts illegal. Trade unions became liable for damages if they were the cause of unlawful industrial actions. It gave employers legal redress against industrial action where the action was not wholly or mainly about employment matters (i.e. strikes which could be considered political)
  • Unemployment > 3 million

    Unemployment > 3 million

  • Inflation down to 10%

    Inflation down to 10%

    Partly due to high umemployment.
  • Although direct taxes fell, the overall tax burden increased.

    Although direct taxes fell, the overall tax burden increased.

    34% of GDP in 1978-79 to 40% of GDP in 1982/3
  • Inflation at 5%

    Inflation at 5%

  • Conclusion

    Conclusion

    She achived her aim of not U turning and sticking to her policies throughout her first term. She was successful in her first term but the economy didn't begin to improve until 1983. based on this she wouldn't have been reelcted in the 1983 election.