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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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Some Conclusions

Some Conclusions

(p.307) 6 Some Conclusions
Decline to Fall

Douglas Wass

Oxford University Press

This chapter gives a synoptic view of the whole episode covered by the book. It first examines how the British economy fared in the aftermath of the IMF drawing. It shows that what happened was greatly different from what the IMF team had predicted would happen as a result of the measures they insisted upon, and that some of the key relationships on which the Fund relied in the monetary field broke down. It also shows that public expenditure in the period for which adjustments were sought and made proved to be a good deal less than had been expected by both the Treasury and the Fund, thus raising the question whether the adjustments sought were, on objective as opposed to presentational grounds, necessary to hit the monetary targets. The chapter describes how the British economy continued to stagnate through 1977, causing the Government to introduce expenditure measures for the following year which effectively reversed the cuts made in 1976. The chapter assesses the Treasury's conduct and advice over the three-year period 1974–6. In particular, it examines whether the Treasury's advice on the management of the exchange rate was feasible and whether enough analysis of the likely effects of a less interventionist policy was in fact carried out. The chapter ends with a discussion of the differences of policy objectives and policy instruments between those of 1976 and those of today and poses the question whether the experience of the former could be repeated in the conditions of the 21st century.

Keywords:   British economy, key relationships, adjustments, stagnate, expenditure measures, exchange rate management, analysis, policy objectives

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