19 sett 1983 anni - Monetarism

Descrizione:

Monetarism is an economic idea that Thatcher involved Britain in heavily. The idea involved:
Focusing on reducing inflation rather than unemployment,
Privatization,
Freeing the market,
Money supply should be better controlled,

Geoffrey Howes (Chancellor of Exchequer) reduce rate of income taxes from 33% to 30%. Additionally the higher marginal taxes were decreased from 83% to 60%. Unearned income tax (income from ownership of land) decreased from 98% to 75%.
To make sure income was coming to the government Howes increased VAT from 8% to 12%.
This made the richer had to pay less tax than the poor and the cost of living also went up. Thatcher and Howes were under the impression that better control over the money supply will fix these short lived issues.

To deal with inflation, Howes increased interest rates from 12% to 14% in June and to 17% in December. This made borrowing money expensive, which affected business's spending which led to higher unemployment.