ABSTRACT
During the war the British economy was mobilized to an extent unmatched by any other belligerent, provoking exceptional pressure on resources and the reduction of unemployment to negligible proportions. The experience of wartime wages policy seems to have lessened the degree of trepidation and increased the degree of optimism surrounding future attempts to deal with the wages problem in a high employment economy. The 1941 budget marked a key turning point in wartime economic policy and, indeed, in modern economic history. This was the first Keynesian budget presented in national income terms and it was accompanied by a White Paper setting out estimates of the national income, expenditure and the ‘inflationary gap’. For example, in another memorandum at this time Keynes wrote, The freedom of the wage bargain is the Ark of the Covenant for the Trade Union Movement, which it is not wise to call in question except for some grave and unavoidable cause.’
