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Pensions
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 -
Increase in Tax
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 -
Incomes policy
June 1979 Government Incomes policy was dropped -
Public Sector Pay Awards
1979 Thatcher agreed to recommendations for increased public sector pay awards -
Employment Act
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. -
Pay Awards
1980 Budget large pay awards for police + army -
Fall in Manufacturing
1980 Partly due to Govt. unwillingness to prop up manufacturing production fell by 11% -
Inflation
Inflation of 22% in spring 1980 up from Labour figure in 1979 -
Recession
1980-81 falling orders for manufactured goods saw the start of a recession + GNP fell by 3.2%. -
Fall in Manufacturing
Manufacturing production which was already declining, fell by 14% 1980-81, partly caused by this govt. policy unwillingness to intervene -
Productivity
1981 Productivity increased amongst those still in work -
Tax
1981 Budget 25p lower rate of tax introduced by Labour in 1978 was abolished -
Unemployment
Unemployment rose to 2.7million in 1981, the highest since the depression of the 1930s -
Consequences of Recession
Consequences of economic recession wave of riots across inner-city London, Liverpool, Manchester, Leeds + Bristol in summer 1981 -
Unemployment
unemployment > 3 million -
Public Expenditure
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 -
Inflation
Inflation down to 10% 1982 – partly due to high unemployment -
Employment Act
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) -
Tax
Although direct taxes fell, the overall tax burden increased from 34% of GDP in 1978-79 to 40% of GDP in 1982/3 -
Thatcher’s 0pinion polls
Thatcher’s continuation in office threatened. Opinion polls showed the Prime Minister’s personal popularity + that of her govt. had declined significantly. -
Inflation
Inflation 5% in 1983 -
Conclusion
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...
