Economic policies of the National Government

Economic policies of the National Government

1. Financial policy

   • aimed to balance the budget and limit government spending to match government income
   • Made a 10% cut in unemployment benefit and introduced a 'means test'
     • Means test
       • introduced in 1931
       • the unemployed who had exhauseted their insurance benefits could apply for the dole
         • the means test took into account the income of other family members
   • implemented cuts in wages of public employees
   • aimed to keep the values of the pound stable by intervening in currency markets
   • lowered interest rates to 2% in 1932
     • made cheap money avaliable to borrowers

2. Trade policy

   • set up 'sterling area', using the pound instead of gold to settle trading accounts
   • import duties act 1932
     • imposed tariffs to protect british industry and agriculture with exemptions for empire countries
   • agreed a form of imperial tariff system at Ottawa Conference 1932
   • made trade treaties with various countries, allowing a quota for their imports into britain for a similar quota for british exports

3. Industrial policy

   • Special Areas Act 1934
     • provided government aid to the most depressed areas
   • Cotton Industry Act 1936
     • closed down non-profitable mills
     • reduce surplus capacity in the industry
   • British Shipping Act 1934
     • provided loans to scrap older ships and build new ones
   • North Atlantic Shipping Act 1934
     • provided loans to help build the atlantic liner 'Queen Mary'
   • set up marketing boards for milk, bacon and potatoes, providing guaranteed prices for farmers
   • provided government subsidies for livestock farmers and sugar beet growers