The Research On The Economic Policy Of Heath Government In Britain

The Heath administration period is an important turning point in British economic development after the Second World War, the Heath Government made some important steps in changing past economic thought and economic policy. The Heath Government broke the post-war consensus, abandoned the traditional Keynesian demand management. In the area of macroeconomic policy, the government reduced the public expenditure and the fiscal deficit, in order to promote economic development, with tax reform simplifying the tax system, in addition, the government exerted monetary policy reform, implemented the policy of “credit and free competition”; In the field of micro economic policy, the government planned to exert privatization, reduce the industrial intervention, and the government introduced the Industrial Relations Act, with the hope to alleviate industrial relations, and abolished the incomes policy when it took office; the Heath Government advocated of market forces and the free competition mechanism. But due to the worsen economic development situation, enormous unemployment, the change of economic thoughts and some reasons of Heath himself, the government's economic policy returned to the postwar Keynesian roads. While Heath Government finally returned to the path of the Keynesian state intervention, but its bold innovation, still has the extremely vital significance. But for a long time, the Heath Government is called “a government of failure”, which is apparently injustice. The academic study about the post-war British economic policy is extensively, but there is not much specialized research for Heath Government's economic policy. This paper aimed at Britain's economic policy in the Heath Government period, including macroeconomic policy and micro economic policies; And make a new evaluation of economic policy of the Heath administration.This article is divided into five chapters altogether.The first chapter analyzes Britain's economic problems before Heath Government. In general, the English experienced a period of rapid development in the 50 s and 60 s of the 20 th century, but in the late 1960 s, the economy developed slowly, the deficit was more serious, the imbalance of international payments deteriorated, in addition, the nationalization had much troubles, the state-owned enterprises lacked investment and motivation, unemployment and inflation began to rise. The traditional Keynesian has no way to solve the problem that unemployment and inflation went together, economic policy reform was imperative.The second chapter generalizes the macroeconomic policy of the Edward Heath Government. Academics agree that there is 180-degree turn on the economic policy of Heath Government. This chapter analyzes the macroeconomic policies before and after the turn, including fiscal policy and monetary policy. In the period of economic policy reform, the government cut public expenditure, stopped the economic expansion, and implemented some corresponding monetary policy reform; And after the U-turn, the Heath Government returned to Keynesian demand management, enlarged the fiscal expenditure, and started to stimulate the economy in order to increase employment, and the famous “Heath-Barber” prosperity is a good example; the monetary policy also changed, the “competition and credit control” policy was replaced by “corset” policy. In addition, this chapter also introduces the British European policy. In 1973, after years of effort, the British finally became a member of the European Community officially, therefore, the government reformed its corresponding tax policies to match the development of the European market.The third chapter analyzes the micro economic policies of the Heath Government, including industrial policy, unions policy and incomes policy. The Heath Government came to power with the determination to reduce industrial intervention, promote the operation of market forces, which can be seen from the “lame duck” policy; But from funding the Rolls Royce for the sake of foreign and defense industry to providing aid for Up Clyde shipbuilders, the government gradually retreated to road of industrial intervention. In order to control the strike and alleviate the labor relations, the government introduced the Industrial Relations Act, with the expect to control the union number and the strike action, but the bill ended in the opposition of unions the tides of the strikes. In addition, this chapter put much focus on incomes policy, the Heath Government came to power with the cancellation of the incomes policy, but after the U-turn, the incomes policy returned, the government implemented a N-1 policy and incomes policy divided into three stages in order to control price and wage growth. Generally these incomes policy produced some effect, but the overall effect is not apparent. And, compared with the former income policy implemented by the other governments, the incomes policy of this period is slightly different.The fourth chapter analyzes the characteristics of the economic policy of Heath Government and the reasons of its U-turn. The biggest characteristic of the British economic policy during this period is a U-turn, namely policy direction has changed dramatically. Secondly, the government still provided aid for many enterprises when seeking for privatization and the reduction of industrial intervention, which betrayed the original intention. The U-turn of the economic policy, on the one hand is caused by the change of economic thought that from abandoning the Keynesian school and accept the New Liberalism and Monetarism to get back to the Keynesian doctrine; on the other hand, the traits of Heath's character, the prime minister type government, the worsen economic condition and the high unemployment rate also played an important role in the U-turn.The fifth chapter is about the government's economic policy evaluation and influence. The Heath Government's economic policy reform which coincided with the direction of history, is the predecessor of the “Thatcher Revolution”, While the U-turn of the economic policy was a step backward, which produced adverse effect on the British economy. Therefore, to assess the Heath Government and evaluate its economic policy, we need to split it in to two and see both its overall and parts. While Heath Government failed in resolving the economic problems and promoting the economic condition generally, but its economic policy reform is still of great significance, which influenced the “Thatcher Revolution”, And Britain's economy didn't get much better after the U-turn, which conform the out date of Keynesian doctrine indirectly, and can be seen as a inspire for the later.