The Impact of Stop-Go Demand Management Policy on Britain's Consumer Durables Industries, 1952-1965

We examine the impacts of British government stop-go policy on domestic sales of consumer durables over 1952 - 1965, via hire purchase restrictions and punitive Purchase Tax rates. Our analysis includes a general review of contemporary evidence regarding the impacts of these measures, a more detailed study of the television sector, and time-series econometric analysis for both televisions and a representative high-ticket labour-saving consumer durable washing machines. We find that the restrictions had devastating impacts on Britain's consumer durables industries, preventing firms from fully exploiting economies of scale, reducing output growth and international competitiveness, and eroding industrial relations. Government officials were aware of these problems, but considered them a price worth paying to facilitate moves towards sterling convertibility and the re-establishment of the City as a leading financial and trading centre.