Callaghan's premiership, 1976 - 79 Flashcards
Describe how Callaghan seemed like the right man for Prime Minister?
Callaghan had long experience and good links to the unions – seen as an ideal leader to maintain party unity.
How had the government faced difficult problems with the economy?
Throughout 1976, poor balance of payments put pressure on sterling and there were concerns that Britain did not have enough reserved of currency to support it.
Describe the speech that Callaghan made in 1976?
He warned the party that the ‘cosy world’ whereby the government could ensure full employment was gone.
What would need to improve to sort out the economy?
Productivity would need to improve to avoid what he called ‘the twin evils’ of unemployment and inflation.
What did he argue about the governments of the previous 20 years?
They had failed to sort out this problem. This seemed to be a criticism of both previous Labour and Conservative governments.
What was the speech made to prepare the Labour Party for?
The fact that the government was planning to apply for an emergency loan from the IMF. It was anxious that there might be a run on the pound.
What happened in December 1976?
The chancellor, Healey, received a loan of £3 billion. In return, the government had to make big spending cuts.
Describe how the economic situation was not as dire as Labour feared.
Callaghan handled the IMF crisis well and the economy recovered, but it reinforced the image of Britain as being in economic decline.
How did the Conservatives slag this image of economic decline off?
They denounced this as a national humiliation.
What did the left wing of Labour see the economic situation as? Describe the growth in leftist militancy.
A betrayal, caving in to international financiers.
Although Callaghan maintained unity among Labour MPs, there was a growth of leftist militancy in some public-sector trade unions and in local councils.
When did the economic situation further improve?
When the North Sea oil came on stream. By 1978, there were nine oilfields in production.
Describe the inflation and unemployment rate.
Inflation rates fell to 10%. Unemployment at 1.6 million was still considered high but had started to fall and the number of days lost to industrial disputes had fallen to a ten-year low.
