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SUMMARY:The 1981 Budget:   ‘A Dunkirk\, not an Alamein’ - Duncan Needh
 am
DTSTART:20131008T121000Z
DTEND:20131008T130000Z
UID:TALK48262@talks.cam.ac.uk
CONTACT:Dr Katherine Bowers
DESCRIPTION:The 1981 Budget was the most controversial in post-war British
  history. Mrs Thatcher’s Government overturned the Keynesian \northodoxy
  that had guided economic management since the Second World War by raising
  taxes in the depths of the worst recession since \nthe 1920s. This prompt
 ed 364 leading economists\, including five former government Chief Economi
 c Advisers\, to write: ‘there is no basis \nin economic theory or suppor
 ting evidence for the Government’s belief that by deflating demand they 
 will bring inflation permanently under \ncontrol and thereby induce an aut
 omatic recovery in output and employment.’ Despite this dire warning\, t
 he 1981 Budget coincided with the start of a period of robust growth for t
 he British economy. The Budget’s contribution to that growth has remaine
 d the subject of fierce \ncontroversy for over thirty years and even today
  influences the debate over the present coalition Government’s austerity
  measures. This \ntalk will show that attempts to portray the 1981 Budget 
 as the ‘the political equivalent of the Battle of Britain: the Thatcher 
 Government’s \nfinest hour’ (Nigel Lawson\, 1992) are wide of the mark
 . Rather\, it was precisely the U-turn that Mrs Thatcher had so publicly r
 uled out at the \nOctober 1980s Conservative party conference. Fiscal poli
 cy\, which had been too loose\, was tightened − to the bewilderment of m
 uch of the \neconomics profession\; monetary policy\, which had been too t
 ight\, was loosened − to the relief of British business. This rebalancin
 g allowed  personal consumption\, through increased household debt\, to be
 come the engine of growth in the 1980s.
LOCATION:The Richard King Room\, Darwin College
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