Economic and Industrial Developments 1974 to 1979

Inflation was high at 15%.

There was a huge balance of payments deficit of over £3,000 million.

The trade unions had still yet to have been dealt with.

The Labour Party was divided, and Wilson himself was older and less energetic.

The government had a minority, and there labour had to depend on other parties to ensure legislation was passed through. However, by October 1974, Wilson felt safe enough to call a new election. Voters still associated Heath and the conservatives with the three day week and conflict with the miners. Wilson won his majority, but only just with a majority of 3, with labour gaining 18 more seats. The conservatives lost 21 seats.

Wilson's successor as PM was James Callaghan, a 'safe pair of hands' with long experience and good links to the unions. Callaghan was seen as an ideal leader to maitain party unity. This was not easy because the government faced difficult problems over the economy. Throughout 1976 the continued poor balance of payments was putting pressure on the sterling and there were concerns that Britain did not have enough reserves to support it.

In September 1976, Callaghan gave a speech to the Labour Party conference where he wanted the party to address the 'cosy world' whereby the government could ensure full employment, and that those days were gone. Productivity would need to imporve to avoid what he called the evil twins of unemployment and high inflation. He argued that the governments in previous years had failed to sort out this problem, causing this to be a criticism of both the labour and the conservative governments. This speech prepared Britain for the IMF loan crisis which was about to occur. 

This speech provided the evidence for the real intiial breakdown in the post-war consensus, allowing for the ideological justification of Thatcherism. 

The IMF loan was paid back by the time the Labour Party left office.

The deficit in the balance of payments was significantly reduced, from over £3,000 million to £902 million. 

The government managed to increase the provision of childcare costs through benefits and pensions, and reduced the gap between men's and women's wages. This appealed to the working classes. 

Inflation was down.

Unemployment was starting to reduce again, from 5.7% of the workforce between 1977 and 1978, to 5.1% of the workforce by 1979.

There was economic growth, at a rate if 2.2%, in comparison to 0.2% in 1974.

The percentage of those unemployed was still considerably high.

The government had failed to achieve anything with the trade unions, which led to the Winter of Discontent. This can be blamed for the party being out of office for such a long period of time. 

There were over 29 million days lost to strikes during 1979.