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] at the time 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

Only half of the loan was actually drawn by the UK government and it was repaid fully by 4 May 1979.[6] Denis Healey, the Chancellor of the Exchequer at the time, went on to state that the main reason the loan had to be requested was that public sector borrowing requirement figures provided by the treasury were grossly overstated.[7] Despite this all terms required by the IMF were fully implemented.

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.[8]

References

Federal Reserve Bank of Minneapolis. "Consumer Price Index (estimate) 1800–". Retrieved 1 January 2020.
"National Archives". Retrieved 17 December 2015.
"Sterling devalued and the IMF loan". The National Archives. Retrieved 17 December 2015.
"BBC On This Day". 5 April 1976. Retrieved 17 December 2015.
Rogers, Chris (2009). The Politics of Economic Policy Making in Britain: A Re - assessment of the 1976 IMF Crisis (PDF). University of Warwick. p. 17.
Denis, Healey (1990). The Time of my Life. Penguin. p. 432. ISBN 978-1842751541.
Moran, Joe (4 September 2010). "Defining Moment: Denis Healey agrees to the demands of the IMF". Financial Times. Retrieved 23 March 2019.
"1976 government papers". BBC News. 29 December 2006. Retrieved 24 December 2015.

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.
Kathleen Burk; Alec Cairncross (1992). Good-bye, Great Britain: The 1976 IMF Crisis. Yale University Press. ISBN 0-300-05728-8.
Mark D. Harmon (1997). The British Labour Government and the 1976 IMF Crisis. Macmillan. ISBN 978-0-333-67818-3.

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James Callaghan
Premiership	1976–1979
General elections	1979
Referenda	1979 Scottish devolution referendum 1979 Welsh devolution referendum
Party elections	Deputy leadership 1960 Leadership 1963 Leadership 1976
Constituencies	Cardiff South Cardiff South East Cardiff South and Penarth
Family	Audrey Callaghan (wife) Margaret Jay (daughter) Peter Jay (son-in-law)
Cultural depictions	The Audience (Play, 2013)
Related articles	1976 IMF crisis Winter of Discontent 1979 vote of no confidence Resignation Honours Father of the House
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1976 IMF crisis

History

Outcome

See also

References

Further reading