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the number of unemployed had reached a million, the highest level for more than two decades. Opposed to unemployment on moral grounds, Heath encouraged a famous "U-Turn" in economic policy that precipitated what became known as the "Barber boom". This was a two-range process involving the budgets of 1972 and 1973, the former of which pumped £2.5 billion into the economy in increased pensions and benefits and tax reductions, all of it largely paid for through
931:
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held in June of that year, with a plan for free-market–oriented policies as solutions to the country's unemployment and inflation problems, but subsequent events would force the government to largely abandon this strategy. Unemployment had increased considerably by 1972, and in
January of that year,
160:
and incentives to business to retain jobs. In terms of government borrowing, £3.4bn would be required to pay for the 1972 budget. With inflation standing at 7.3%, Prime
Minister Heath and Chancellor Barber had introduced an official growth target of 5%, with Barber forecasting UK growth would be at
195:
strategy, unemployment had fallen to under 550,000. The economic boom did not last, and the Heath government implemented various cuts that led to the abandonment of policy goals such as a planned expansion of nursery education. The situation was worsened by industrial unrest, as well as the
227:. The fallout from the budget throughout the 1970s also convinced many Conservatives that " Keynesian measures which used government spending to boost the economy and cut unemployment, no longer worked".
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10% within two years. Public expenditure controls were also lifted, with Barber describing his objective as being "To achieve a rate of growth twice as fast as in the past decade".
52:
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435:"Not yet a crisis, but it doesn't look especially good as chancellor's mini-budget sees pound plummet and sparks extraordinary response from financial markets"
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and a consequent increase in inflation. His next budget would see the introduction of wage freezes in an attempt to control inflation, something that led to
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was required to go to the
International Monetary Fund for a loan to help keep the economy afloat. The 1972 budget also led to Heath's defeat at the
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200:. Inflation eventually reached double digits, and by 1979, interest rates had increased to 11.3%; they would average 12.7% between 1980 and 1989.
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115:, on 21 March 1972. The budget is remembered for its large tax cuts, and led to high inflation and demands for higher wages, as well as the
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has been compared to the 1972 budget because of the large tax cuts announced by the
Chancellor,
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348:"Why the 'Barber boom' that Kwasi Kwarteng's mini-budget recalls was destined for disaster"
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government. The UK economy continued to perform poorly and in 1976 the government of
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384:"Why the biggest tax-cutting budget since 1972 means we're all worse off"
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The Five Giants: A Biography of the
Welfare State by Nicholas Timmins
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with the dollar having become indefensible, Barber was forced to
505:"UK's Biggest Tax Cuts Since 1972 Trigger Crash in Pound, Bonds"
483:"Kwasi Kwarteng's plan for growth was a bad idea 50 years ago"
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Against this background, Heath called a general election in
410:"Outlier Britain needs a credible economic plan in a hurry"
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elected to lead the party. She would go on to win the
191:By early 1974, and as a result of the government's
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461:"Why the economy is now in uncharted territory"
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119:when the UK government was forced to ask the
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408:Macpherson, Nicholas (30 September 2022).
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503:Aldrick, Philip (23 September 2022).
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232:mini-budget held on 23 September 2022
217:1975 Conservative leadership election
459:Waller, Martin (24 September 2022).
382:Gausden, Grace (23 September 2022).
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123:for financial help. It also led the
481:Haslett, Emma (23 September 2022).
310:"BUDGET BRIEFING | Budget blunders"
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186:first recession since World War II
176:the pound, resulting in its rapid
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101:dash for growth budget
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557:United Kingdom budget
225:1979 general election
149:1970 general election
147:came to power at the
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154:government borrowing
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353:The Guardian
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178:depreciation
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127:to abandon "
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899:Money bill
879:Budget Day
858:March 2024
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591:June 1979
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419:1 October
393:2 October
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320:2 October
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314:BBC News
242:See also
166:sterling
103:) was a
564:By year
135:History
82:‹
21: (
209:Labour
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105:budget
872:Other
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174:float
88:1973›
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