Tuesday, April 9, 2013

Thatcher's Britain

April 9, 2013

Margaret Thatcher's record in office was a chequered one. The economy suffered an excruciating squeeze in the early 1980s as both interest rates and the exchange rate jumped. Inflation was 10% when she became prime minister in May 1979 and 10% when she left office 11 years later. The number of unemployed soared to a post-war high of over 3m in 1986. Despite these setbacks, household incomes began to rise sharply after the recession of the early 1980s. Government spending was cut back to under 40% of GDP and the budget deficit brought under control. Above all, Mrs Thatcher set the British economy on a new course, away from state control and towards market disciplines that paved the way for price stability and reversed the relative decline (compared with countries like France and Germany) that had been so demoralising in the 1960s and 1970s.