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June 1979 Pensions would be based not on the ‘movement in prices + earnings, whichever is greater’ but solely on prices – Pensioners set to get poorer relative to those in work
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June 1979 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
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June 1979 Government Incomes policy was dropped
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1979 Thatcher agreed to recommendations for increased public sector pay awards
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1980 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.
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1980 Budget large pay awards for police + army
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1980 Partly due to Govt. unwillingness to prop up manufacturing production fell by 11%
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Inflation of 22% in spring 1980 up from Labour figure in 1979
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1980-81 falling orders for manufactured goods saw the start of a recession + GNP fell by 3.2%.
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Manufacturing production which was already declining, fell by 14% 1980-81, partly caused by this govt. policy unwillingness to intervene
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1981 Productivity increased amongst those still in work
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1981 Budget 25p lower rate of tax introduced by Labour in 1978 was abolished
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Unemployment rose to 2.7million in 1981, the highest since the depression of the 1930s
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Consequences of economic recession wave of riots across inner-city London, Liverpool, Manchester, Leeds + Bristol in summer 1981
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unemployment > 3 million
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Public expenditure 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
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Inflation down to 10% 1982 – partly due to high unemployment
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Employment Act 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)
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Although direct taxes fell, the overall tax burden increased from 34% of GDP in 1978-79 to 40% of GDP in 1982/3
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Thatcher’s continuation in office threatened. Opinion polls showed the Prime Minister’s personal popularity + that of her govt. had declined significantly.
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Inflation 5% in 1983
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Overall her managment of the economy was successful as it inflation fell, however this was at the price of high unemployment and her popularity, this seriously diminshes her chance of reelection. She would need a miracle...
