The ‘Stop-Go’ Squeezes of the 1950s and 1960s

This chapter describes four fiscal squeezes across two decades marked by broadly full employment and no major recession, albeit with slow economic growth, recurring currency crises, and ‘stop-go’ policies to dampen consumer demand. The first squeeze in the mid-1950s reflected the Conservatives’ uphill struggle to deliver on their 1951 election promise to cut taxes and ‘set the people free’ against the background of currency weakness and the Korean and Cold Wars. Spending restraint in this era put the emphasis on cutting wartime legacy spending rather than checking the core drivers of welfare state growth. The subsequent three squeezes under Conservative and Labour Governments in the 1960s all put a heavier emphasis on revenue than spending to support welfare state expenditure and stabilize the currency, but the Wilson Labour Government made significant defence cuts in the late 1960s.