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Decline to FallThe Making of British Macro-economic Policy and the 1976 IMF Crisis$
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Douglas Wass

Print publication date: 2008

Print ISBN-13: 9780199534746

Published to Oxford Scholarship Online: May 2008

DOI: 10.1093/acprof:oso/9780199534746.001.0001

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1974—Marking Time

1974—Marking Time

(p.35) 2 1974—Marking Time
Decline to Fall

Douglas Wass

Oxford University Press

This chapter looks at the origins of the inflation which struck the developed world in the early 1970s, and the huge balance of payments imbalances which followed the explosion of oil prices in 1973. It describes what the internationally prescribed responses were and recounts how the policy followed by the Heath Government came to be defeated by the reactions of organised labour. It goes on to describe what the policies of the incoming Labour Government were in March 1974 and how they contributed to a compounding of the economic problems. It scrutinizes what the Treasury advice to ministers was to restore balance to the economy — controlling public expenditure, financing the balance of payments, and achieving equilibrium in the trade balance. It argues that although some progress was made in all these areas the problem of inflation was not addressed and the Government continued to pin its faith on the Social Contract it had concluded with the TUC.

Keywords:   inflation, oil prices, payments imbalances, Heath, Labour Government, public expenditure, balance of payments, Social Contract, TUC

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