In economic life the Labour government became more rigorous. A persistent trend toward inflation, unfavorable balance of trade, and unbalanced government budgets led to a wage-and-price freeze in 1966 and attempts thereafter to secure “severe restraint.” These actions eased certain economic problems but at the price of alienating many of Labour’s union supporters, and in 1970 the Conservatives returned to power under Edward Heath.

Battle Against Inflation

A major theme of British history since the mid-1960s has been the battle to eliminate double-digit inflation. Heath’s policy of deliberate economic expansion did not accomplish that goal, however, and the attempt to curb the legal powers of labor unions in 1971 evoked a mood of civil disobedience among union leaders. More working days were lost because of strikes in 1972 than in any year since the general strike of 1926. Heath hoped to solve economic problems by “floating the pound,” that is, by freeing Britain’s currency from earlier fixed rates of exchange with other currencies, and by again seeking British admission to the EC. Britain did join in 1973, and two years later the first national referendum in British history approved the step by a 2-1 margin. An attempt by Heath in 1972 and 1973 first to freeze and then sharply to restrain wage and price increases was defied by the miners. When Heath appealed to the public in the general election of February 1974, the results were indecisive. A revival in the popular vote of the Liberal Party, however, enabled Harold Wilson to form a minority Labour government that lasted five years under his leadership and that of James Callaghan.

Irish and Scottish Problems

During the 1970s, successive British governments also faced difficulties in Ireland and Scotland. A civil rights movement supporting social equality for the Roman Catholic minority in Northern Ireland clashed violently with Protestant extremists. In 1969 the British government sent troops to keep order, and in 1972 it abolished Northern Ireland’s autonomous parliament. A campaign of terrorism by the Irish Republican Army (IRA) followed; its aim was to unite Northern Ireland with the Irish Republic in defiance of the wishes of a majority of the Northern Irish people. British measures gradually curbed but could not totally halt the wave of bombings and killings in Northern Ireland and England. In Scotland, a Scottish Nationalist Party scored impressive gains in the elections of 1974, and Callaghan’s ministry attempted to set up a semi-independent parliament in Edinburgh. When only 33 percent of the Scottish electorate supported the plan in a 1979 referendum, the project died, at least temporarily.

Economic Woes Under Labour

The Labour government of 1974 to 1979 began by ending all legal restrictions on wage and price rises, but after the annual inflation rate topped 25 percent in 1975, the government did succeed in obtaining some trade union restraints on wage claims in return for an end to some voluntary restraints on wage claims; the inflation rate declined somewhat between 1976 and 1979. In return, union leaders demanded an end to legal restraints on union power and more government subsidies for housing and other social services. By the late 1970s, British politics seemed to be polarizing between left-wing Labourites, who sought an ever larger role for the state in order to impose social equality, and Conservatives, who hoped to restore a greater role to private enterprise and individual achievement. By the beginning of 1979, Callaghan’s government was dependent on two minor parties. A winter of labor unrest undercut his claims to be able to deal successfully with the unions, and a vote of no confidence in March 1979 went against him.

The Thatcher Decade

In the elections of April 1979 the Conservatives, led by Margaret Thatcher, emerged with a substantial majority of parliamentary seats and with the first woman prime minister in British or European history. She was to remain in office for the next 11 years, making hers the longest continuous prime ministership since the end of the Napoleonic Wars.

Thatcher’s first years were difficult. She sought to halt inflation by a policy of high interest rates and government budget cuts, rather than of wage and price freezes. By 1981 and 1982 those policies were showing some success, but only at the cost of the highest unemployment rates since the 1930s. The government was jolted in April 1982 when Argentina forcibly occupied the Falkland Islands, a British-held archipelago in the South Atlantic that Argentina had long claimed. When U.S. mediation efforts failed, Thatcher sent a British counterinvasion fleet, and in June that force succeeded in recapturing the islands.

The decisive Conservative victories in the elections of June 1983 and June 1987 were the consequence not only of widespread popular support for the government’s Falklands policy, but also of a sharp division in the ranks of the political opposition. In 1980 a group of Labour Party members headed by Roy Jenkins and David Owen broke away and in 1981 formed the Social Democratic Party. The new party joined with the Liberals to constitute an influential alliance that ultimately won relatively few parliamentary seats but did garner 25 percent of the total popular vote in 1983 and 23 percent in 1987 (compared to 28 and 31 percent for Labour and 42 percent in both elections for the Conservatives).

The years between 1982 and 1988 were economic boom years in Britain. The living standards of most Britons rose and the rate of unemployment gradually ebbed. British industries became more efficient, and London maintained its role as one of the world’s top three centers of finance. The economic role of government declined as Thatcher promoted privatization—the turning over to private investors of government monopolies such as British Airways, the telephone service, and the distribution of gas and water. Public housing tenants were strongly encour********************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************ble-digit inflation, the enactment of an unpopular “poll tax” (as a substitute for local government real estate taxes), and the alienation of some members of her cabinet over the prime minister’s increasingly critical attitude toward cooperation with her EC colleagues.

John Major

Thatcher was succeeded as Conservative Party leader and prime minister by John Major, who continued Thatcher’s policy of maintaining close ties with the United States. British troops fought as part of the multinational coalition led by the United States in the Persian Gulf War (1991). In 1992, despite an economic recession, Major led his party to victory in the April general elections, though with a reduced majority. Opposition leader Neil Kinnock, who had gradually moved his Labour Party back from the left toward the ideological center, resigned after the election. Following the Conservatives’ election victory, Major’s government faced a growing financial crisis as the pound weakened in the currency market, inflation and unemployment grew, and the nation entered a recession. As a result, Major received the lowest approval rating, 14 percent, of any prime minister in British history.