Thatcher's economic policies 1979-1983

economic policies of Thatcher's govt

Period: Jan 1, 1979 to Dec 31, 1983

Government Incomes policy was dropped

Jun 2, 1979

Pensions would be based not on the ‘movement in prices + earnings, whichever is greater’ but solely on prices

Jun 7, 1979

Pensioners set to get poorer relative to those in work

Budget raised indirect taxes

Jun 19, 1979

(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

Thatcher agreed to recommendations for increased public sector pay awards

Oct 24, 1979

1980 Partly due to Govt. unwillingness to prop up manufacturing production fell by 11%

Feb 18, 1980

Inflation of 22% in spring 1980 up from Labour figure in 1979

Mar 29, 1980

1980 Budget large pay awards for police + army

May 26, 1980

Employment Act

Sep 25, 1980

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.

falling orders for manufactured goods saw the start of a recession + GNP fell by 3.2%.

Dec 31, 1980

Manufacturing production which was already declining, fell by 14%

Jan 1, 1981

partly caused by this govt. policy unwillingness to intervene

Productivity increased amongst those still in work

Mar 8, 1981

Unemployment rose to 2.7million

Apr 25, 1981

Budget 25p lower rate of tax introduced by Labour in 1978 was abolished

Jul 17, 1981

Consequences of economic recession wave of riots across inner-city London, Liverpool, Manchester, Leeds + Bristol

Jul 27, 1981

Employment Act

Mar 28, 1982

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)

Public expenditure

Apr 22, 1982

continued to rise, reaching 44.5% of the gross domestic product (GDP) in 1982, largely as a result of the huge increases in the number of those receiving unemployment benefit

Inflation down to 10%

Aug 14, 1982

partly due to high unemployment

unemployment > 3 million

Sep 24, 1982

Thatcher’s continuation in office threatened

Nov 28, 1982

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

increasing and decreasing of taxes

Dec 31, 1982

Although direct taxes fell, the overall tax burden increased from 34% of GDP in 1978-79 to 40% of GDP in 1982/3

Inflation 5%

Feb 24, 1983

conclusion

Dec 31, 1983

i believe that it would have been a narrow win for conservative as labour would win the election due to the state they left the country in both socially with uproar with TU and economy with high inflation. Although Thatcher was able to decrease inflation,it was a long struggle to reach the 5% it eventually was in 1983. overall Thatcher had stuck to her policies and had not u-turned therefore cnanot be criticised for backing down. But despite this unemployment was high and faith would be lacking.