Economy 1918-1939

Economy 1918-1939

1. DLG 1918-1922

   • Effect of WW1
     • Unexpected quantity of resources
     • Huge Wall Street loans
     • Export Market cuts
     • Merchant Shipping sunk
     • £3.25 billion debt
   • Decline of exports
     • Negative balance of payments
       • Increased debt to £8 billion
       • 1920s
   • Wartime industries couldn't deal with demand
     • short supply goods expensive
   • High unemployment
   • Traditional industries collapsed
     • Little investment
   • Deflation
     • Rising interest rates
       • Very expensive to borrow
         • Drained available spending money
         • Debt rose to 160 GDP
     • Spending cut by 75%
   • Loss of Export trade
     • New competitors
       • US' cheaper/superior quality
   • Geddes Axe
     • £87 million cuts
       • Military
       • Health
       • Housing
     • Tariffs
       • Protected Brit industry
       • Prevented unemployment increases

2. Ramsay Macdonald 1922-1924

   • Lacked parliamentary majority
     • Unable to increase spending/taxation
       • Didn't improve economy or create jobs
   • Wanted to appear 'fit to rule'
     • Middle class voters
   • Unemployment rose to 8% in 1925
   • Inflation fell
     • Collapsed spending

3. Stanley Baldwin 1924-1929

   • Reintroduced Britain to Gold Standard
     • 1925
     • Prolonged economic slump
     • Harder for businesses to borrow
       • Higher unemployment
   • High British export costs
     • Offset by employers reducing hours
     • Short hour contracts
       • Almost as much financial hardship as unemployed

4. Ramsay Macdonald 1929-31

   • Wall Street Crash 1929
     • Share prices of US stock exchange collapsed
     • Global trade contracted by 66%
     • Exports declined by 50%
     • Traditional industries collapsed
     • Gold Standard shrunk economy by 5%

5. National Government 1931-1937