The British Labour Government and the 1976 IMF Crisis

The Rebirth of the Liberal Creed: Paths to Neoliberalism in Four Countries

“…For instance, the IMF package to salvage the pound in 1976 caused some turmoil among developing nations, which found the "conditions" imposed upon Britain 16 From this point of view, the end of the 19th century bears a certain resemblance with our current era. Indeed, the glorious days of "laissez faire" and classical liberal theory were associated with a very open international trade regime (dominated by Britain) and large and erratic international capital movements (Bairoch 1996;Helleiner 1994). to be much softer than those they themselves had to abide by in order to secure similar assistance (Harmon 1997).…”

Neoliberalism, Institutional Change and the Welfare State: The Case of Britain and France

“…During this period, the diagnosis of the 'crisis' remained in entirely Keynesian terms. Thinking that the 'crisis' was of a temporary nature, not related to the fundamentals of the British economic policy, the government went ahead and exercised expansionary policies, increasing social spending and public sector wages (Harmon, 1997). Far from offsetting the economic problems, however, these policies aggravated Britain's economic problems.…”

“…By March 1974, when the Labour government headed by Harold Wilson came to offi ce, the world's oil producers had raised fourfold the price of oil; infl ation had increased to 16 percent (from 9.2 percent in 1973); the balance of payments, which had been in surplus in the previous years, had moved into defi cit; and recession was at the door (Hall, 1986;Cairncross, 1992;Britton, 1994;Harmon, 1997). In addition, as Britton points out, 'the circumstances in which the Labour Party came to power further reduced their freedom of action' (Britton, 1994: 18).…”

All out of money 1976–77

“…The trade unions, which provided strong support to the Labour Party, were also making their opposition known to accepting deep PSBR cuts as a condition of the IMF loan. 41 The trade unions were hardly being encouraged to shift from this position given that the likes of Michael Foot were giving rousing speeches proclaiming that public expenditure on social services should not be reduced. 42 The prime minister therefore had a divided Cabinet, and more worrying was the fact that his two most senior Cabinet officials, Denis Healey and Antony Crosland, held diametrically opposed positions.…”