History Essay

460 Words2 Pages
How successful were the National Government in dealing with economic problems in the years 1931 to 1939? (24 marks) There are many factors suggesting the success of the National Government in dealing with economic problems. The government faced different challenges to revive Britain’s economy. One factor was that the government tried to maintain Britain’s economic position which intensified from the existing economic problems carried over from the 1920s, especially the decline of the staple industries. World trade shrank and with it the demand for British exports fell by a third in volume and by a half in value by 1932. To solve this, the government abandoned the gold standard where they devalued the pound by 20%, this therefore boosted foreign trade as leaving the gold standard made British exports cheaper and the goods more affordable. Another factor was that the National Government introduced a range of economic policies to deal with the crisis it had inherited. These policies tackled financial problems, trade and industry. For example in financial policy, the National Government lowered interest rates to 2 percent in 1932, making ‘cheap money’ available to borrowers, this helped recovery in several ways as it made it easier for industries to borrow money to invest in modern machinery and plant. It also made it easier for consumers to borrow money on mortgages to buy new houses which then resulted into a private house building boom with two million homes built in the 1930’s. Thirdly, the national government aimed to balance the budget and limit the government spending to match government income, this included the wages of public employees like teachers and policemen as well as unemployment benefit, this all helped to maintain international confidence and stopped the banking crisis. However, there are factors suggesting the lack of success for

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