Historical Reflections: The Thatcher Era

By Researcher Kwabena Adu-Poku

The premiership of Margaret Thatcher was as ground-breaking as it was controversial. Thatcher’s premiership oversaw the most transformative period in British society since the Second World War. She was elected in a time of great uncertainty during the Winter of Discontent.  


Thatcher’s government was well known for its promotion of right-wing monetarist economic policies devised by economists such as Milton Friedman. The core tenet is the idea that the management of inflation via the central bank was more critical to ensuring economic stability and growth than government intervention via stimulus spending. Through most of her term she hiked up interest rates in order to reduce inflation by reducing the money supply. Indeed, one of the factors resulting in the 1981 riots in England, other than racial tension spurred by perceived racial profiling by police forces, was the economic climate that arose as a result of Thatcherite economic policies. Unemployment had risen to 2.5 million, rising from 1.5 million two years prior. Signs of recovery were evident from 1983 where inflation reached a low of 4.6%, down from 8.6% the year before, although in this same period unemployment had risen to 3 million people. The year 1990 saw the end of Thatcher’s premiership and an inflation rate of 7%, with the level of unemployment falling to just over 2 million people.  

Thatcher was initially against British membership of the European Exchange Rate Mechanism (ERM). She feared that membership of the ERM would diminish the dynamism of the British economy. Ultimately, however, the woman who was famously “not for turning” changed her position, and Britain subsequently joined the ERM in 1990. Two years later the events of Black Wednesday proved that the UK pegged its currency at too high a rate.

Thatcher sparked controversy by the imposition of the Community Charge also known as the poll tax in 1990. Such a policy was a form of regressive taxation, a kind of taxation favoured by New Right economists, but widely deemed to disproportionately negatively affect the poor. In March 1990 a demonstration was held in London consisting of between 70,000 and 200,000 protestors. 


Many argue that privatisation was the defining feature of the Thatcher era. By the end of her premiership, more than 40 state owned enterprises had been privatised, in total the sale of nationalised enterprises raised over £29 billion, a further £18 billion were raised through the controversial selling of council house property as part of the Right to Buy programme between 1980 and1997. The argument of the existence of natural monopolies has long been a critique of the privatisation of certain state industries. The existence of natural monopolies means that industries such as water were actually more efficient as monopolies as they could then benefit from greater economies of scale and spread the high cost of production leading to lower prices.

Industrial relations 

Thatcher viewed the power of the trade unions as being a key cause of economic strife, such as the 1979 Winter of Discontent. Actions such as outlawing “sympathy strikes”, those being strikes undertaken by other professions in order to show solidarity with another profession, highlight Thatcher’s commitment to limiting the power of the trade unions. 

In March 1984, the National Coal Board (NCB) announced plans to close 20 out of 174 state-owned mines, resulting in the termination of 20,000 jobs. In response,  the National Union of Mineworkers (NUM) led a protest against the NCB. The strike was ultimately declared to be illegal by the High Court as a result of the leader of the NUM, Arthur Scargill, not holding a ballot in order to gain approval for strike action. The strikes became violent in Scotland, where at Bilston Glen colliery punches were thrown between those who picketed and those who were blocked by these picketers from going to work. The strike ultimately concluded in March 1985, one year after it began. The NUM conceded defeat; the impact to the economy was sizeable, a £1.5 billion economic loss. 

Foreign Relations

Thatcher’s first foreign policy situation involved conflict between the white and black populations of Rhodesia. Lord Carrington, Thatcher’s appointed Foreign Secretary was able to broker an agreement between the Prime Minister of Rhodesia Ian Smith, and black leaders such as Robert Mugabe and Joshua Nkomo. This resulted in the foundation of Zimbabwe in 1980 and the conclusion of the Rhodesian Bush War.

As a strong critic of the USSR Thatcher was firmly opposed to the 1979 Soviet invasion of Afghanistan. In response to the invasion she convinced some British athletes to formally boycott the 1980 Moscow Olympics.

Thatcher sought to replace the Polaris nuclear weapons system used by the UK by buying the Trident nuclear missile submarines from the US. The relationship between Thatcher and her Defence Secretary Michael Heseltine came to a head as a result of the Westland Affair of 1985-86. Thatcher, alongside some cabinet colleagues, acted to try and ensure that the British helicopter manufacturer Westland was bought by Sikorsky Aircraft, a US firm, rather than the Italian firm Agusta. Michael Heseltine ultimately resigned from his post as Defence Secretary due to his favouring of the takeover bid proposed by Agusta.

The Falklands War is arguably one of the most crucial moments of Thatcher’s premiership. On 2nd April 1982, the Argentine government invaded The Falkland Islands and South Georgia, both British owned territories. Thatcher set up a War Cabinet and subsequently ordered the despatch of a naval task force to engage the Argentine forces. Ultimately Thatcher prevailed and Argentina officially surrendered on the 14th June 1982.

Thatcher had a tumultuous relationship with Europe. During the 1975 referendum on membership in the European Economic Community (EEC), the Conservatives supported British membership, but favoured limiting the role of the organisation. Thatcher favoured an EEC that was devoted to fostering positive free market conditions such as effective competition and free trade. In-keeping with her fears of the “nanny state” and excessive government interference, she worried that the EEC would become a more centralised body and take on more power over time. Thatcher famously stated in a 1988 speech at Bruges that her government had “not successfully rolled back the frontiers of the state in Britain…” only for a European super-state authority to impose further regulation and government bureaucracy, what she viewed as threats to not only free market capitalism, but also parliamentary democracy.

Tensions in the Middle East heightened at the tail end of Thatcher’s premiership. Saddam Hussein, the leader of Iraq, invaded Kuwait in August 1990. Thatcher personally advised the then US President George H.W. Bush to intervene and deploy troops in order to combat the invasion of Kuwait that had been undertaken by the Iraqi Army. The British government supplied military forces to the US-led coalition that was formed in response to the Iraqi aggression. By 17th January 1991, the Gulf War had begun, but Thatcher had already resigned by this point


After consulting with her cabinet, Thatcher decided, having held power for 11 years, to resign her role. This followed a leadership election that was triggered by Michael Heseltine, who challenged Thatcher’s leadership. She made her final speech at the Commons on the 28th November, reportedly crying on leaving Downing Street. Thatcher was replaced by her Chancellor for the Exchequer, John Major. Major was able to keep the Conservatives in power and prolong the Labour wilderness years, through his success in the 9th April 1992 general election.

Sources and Further Reading 

Image: Ronald Reagan Presidential Library @WikimediaCommons

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