Currency Crisis and Restricted Policy Options, March–August 1976: Opening ‘Pandora’s Box’

Abstract

With the passage of the Government’s plans in March 1976 to freeze the level of public expenditure through 1979–80 (UK Parliament 1976), Chancellor of the Exchequer Denis Healey was of the view that enough had been done to assuage external confidence and to ‘free up’ domestic resources to allow an export-led economic recovery (UK Healey 1976a: 272). It became clear over the following months, however, that the policies adopted in early 1976 were deemed inadequate by actors who were in a position to have their policy preferences realized. The Government’s expenditure plans would have to be revised downward twice again in 1976.

Journalists William Keegan and Rupert Pennant-Rea (1979: 162) characterizing the sterling depreciation that began in March 1976.