1974-1979, Britain began to suffer worst effects of the rapid inflation that followed the dramatic rise of oil prices following the crisis of 1973, by 1975 inflation was at 24%. The Decline in the value of the pound (1976 fell to $1.57) and growing debit in its trade balance threatened to make GB bankrupt.
IMF loan; in September 1976 the Chancellor of Exchequer Dennis Healy began negotiating a loan of £3 billion from the IMF, in order to obtain the loan the Government must implement a major public spending cuts; this outraged left members of the party and the unions who threatened to make trouble. In October, Healy made an announcement at the Labour Party conference to maintain party unity, and to a point was successful, although it is reported he was jeered off stage by some members of the party. By 1979, the government was in line with the IMF conditions to cut public spending and had done so by £3 billion. The IMF loan was largely successful, confidence in the pound returned helping to stabilise the financial crises and was largely paid off by 1977.
December 1977 Callaghan announced a compulsory 5% ceiling on wage rises (inflation was at 10%), but the unions retaliated by becoming more sweeping in their demands.
Unemployment reached 1.6 million in 1978.
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