Finance:1976 IMF Crisis
The 1976 IMF Crisis was a financial crisis in the United Kingdom in 1976 which forced James Callaghan's Labour Party government to borrow $3.9 billion ($17.5 billion in 2019)[1] from the International Monetary Fund (IMF),[2] the largest loan ever to have been requested from the IMF.[3]
History
The IMF Crisis took place during James Callaghan's term as Prime Minister,[4] and caused the Bank of England to withdraw temporarily from the foreign exchange market.[5] After the defeat of the public expenditure white paper in the House of Commons in March 1976 and the resignation of Harold Wilson, many investors became convinced the pound would soon lose value due to inflation. By June 1976, the pound had reached a record low against the dollar.[3]
Outcome
The IMF loan meant that the United Kingdom's economy could be stabilised whilst drastic budget cuts were implemented. Even with the loan's security, the Labour Party had already begun unravelling into camps of social democrats and left-wing supporters, which caused bitter rows inside the party and with the unions. Many believe this may have contributed significantly to Margaret Thatcher's 1979 Conservative victory.[6]
References
- ↑ Federal Reserve Bank of Minneapolis. "Consumer Price Index (estimate) 1800–". https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1800-.
- ↑ "National Archives". http://www.nationalarchives.gov.uk/cabinetpapers/themes/imf-crisis.htm.
- ↑ 3.0 3.1 "Sterling devalued and the IMF loan". http://www.nationalarchives.gov.uk/cabinetpapers/themes/sterling-devalued-imf-loan.htm. Retrieved 17 December 2015.
- ↑ "BBC On This Day". http://news.bbc.co.uk/onthisday/hi/dates/stories/april/5/newsid_4074000/4074428.stm.
- ↑ Rogers, Chris (2009). The Politics of Economic Policy Making in Britain: A Re - assessment of the 1976 IMF Crisis. University of Warwick. pp. 17. http://wrap.warwick.ac.uk/4323/1/WRAP_Rogers_100211-the_politics_of_economic_policy_making_in_britain_pp_26-6-2009.pdf.
- ↑ "1976 government papers". http://news.bbc.co.uk/1/hi/uk_politics/6212557.stm. Retrieved 24 December 2015.
Further reading
- Burk, Kathleen. "1976 IMF Crisis." (1989): 39-45.
- Ludlam, Steve. "The gnomes of Washington: Four myths of the 1976 IMF crisis." Political Studies 40.4 (1992): 713-727.
- Wass, Douglas. Decline to Fall: The Making of British Macro-economic Policy and the 1976 IMF Crisis: The Making of British Macro-economic Policy and the 1976 IMF Crisis. Oxford University Press, 2008.
- Kevin Hickson (13 May 2005). The IMF Crisis of 1976 and British Politics: Keynesian Social Democracy, Monetarism and Economic Liberalism: the 1970s Struggle in British Politics. I.B.Tauris. pp. 14–. ISBN 978-1-85043-725-3. https://books.google.com/books?id=kstOuQ0qJoEC&pg=PA14.
- Kathleen Burk; Alec Cairncross (1992). Good-bye, Great Britain: The 1976 IMF Crisis. Yale University Press. ISBN 0-300-05728-8. https://books.google.com/books?id=YamJGlX2_vkC.
- Mark D. Harmon (1997). The British Labour Government and the 1976 IMF Crisis. Macmillan. ISBN 978-0-333-67818-3. https://books.google.com/books?id=NhJtQgAACAAJ.
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