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New-Look Economics?

A statement from the UK Employers Federation saying 'The greatest need today is to establish confidence that any (economic) plan announced is based on realism and that the resources allocated can be guaranteed’ could have appeared in the autumn of 1992. It was, however, issued in 1947 and, as with the British Government of 1992, was only one of a number of articles and comments which took the Attlee government to task during the year.

In the current recession most commentators in Britain have made comparisons, using raw statistical evidence, to the Great Depression of the Thirties. By contrast, a number of American commentators have highlighted the circumstances of a post-war world as a new condition, in much the same way as they faced the aftermath of the Second World War. In January 1993 the British Foreign Secretary described this condition as a 'new world disorder'. For comparison, the issues of the day in 1947, domestic and foreign, appear remarkably familiar – GATT, a new Europe, fighting in the Balkans, the Palestinian issue and arguments over the Civil List and, not least, economic turmoil and crisis.

For the first eighteen months the Attlee Labour government of 1945 had, by maintenance of an effective wartime economy, appeared to have made a smooth transition from war to peace. However, by the winter of 1946 it faced a series of pending crises, not least those arising from a 'cheap money' policy. This had fuelled a boom in demand, not unlike that of the late 1980s, where too much money was chasing too few goods. In April 1946 Chancellor Dalton argued that 'the only counter to inflation' was 'to produce more goods', probably basing his assurance on the 8 per cent rise in production on 1938 levels during the past year. He added to his own future problems by introducing tax cuts.

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