ABSTRACT
The mid-1970s are commonly seen as a watershed in post-war economic policy. The ‘golden age’ of the 1950s and 1960s came to an end in a period of ‘stagflation’ and crises over public spending, borrowing and the exchange rate. The ‘Keynesian’ consensus about how to conduct economic policy was fundamentally challenged by the sharp rise in both inflation and unemployment coupled to a major loss of financial confidence. Subsequently, both Conservative and New Labour politicians and their academic allies have seen ideological advantage in painting the period in the worst possible light. If historical distance is unlikely to lend enchantment to our view of the period, it does at least allow some perspective, and such perspective is what this chapter seeks to offer. In assessing Labour’s economic policy in this period, the discussion is divided into four sections. The first deals with Labour’s inheritance from the Heath period (1970-4), the second with the Government’s policy responses to the problems it faced, the third with the outcomes of those policies, and the final part attempts to set these years in a broader perspective of post-war economic policy evolution. The focus throughout is on macro-economic policy, other issues only being discussed if they bear on this macro aspect.
