Monetarism & The Free market
- Thatcher wanted to restore the free market - an economic system in which the forces of supply and demand are allowed to operate naturally, without regulation by the government. This would replace the Kenynesian system that British governments had followed since 1945.
- In order to bring inflation under control, Thatcher's government chose to adopt monetarism: a financial theory that suggested in order to control inflation the government had to restrict the amount of money in circulation and reduce public expenditure.
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- The rate of inflation fell from 15% in 1979 to 5% in 1983.
- Although inflation fell, it came at the price of job losses - with unemployment rising every year after 1980.
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The Falklands War 1982
- Thatcher remodels herself as a wartime leader.
- The legal ownership of the island had been a long dispute between Britain and Argentina - many Scottish sheep farmers resided on the island.
- The Argentine dictator ordered the seizure of the Falklands, and with Thatcher adamant on regaining control, ordered a British task force to recapture the island.
- A 200 mile exclusion zone was placed around the island.
- The sinking of the Belgrano was viewed controversially by the British public - Thatcher defended her actions by asserted that the cruiser was a threat to British personnel.
- The war resulted in a surge in Thatcher's popularity. This prepared the way for 1983 election success.
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The Miners' Strike 1984-85
- The British coal industry was in recurrent crisis - with coal increasingly costly and difficult to mine.
- Thatcher did not believe in proping up ailing industries, and declared the government's unwillingness to carry on supporting the coal industry.
- The miners' produced a strong counter-argument "coal not dole" - and highlighted the social consequences of the pit closures.
- The head of the NUM, Arthur Scargill was interested in the economic position of workers, and determined to resist the pit closures.
- In order to oppose Scargill, Ian McGregor was backed by the government.
- The government made measures to reduce union power - 1980 &1982 Employment Acts, stockpiling coal.
- The strike lasted a year, with violent clashes occuring between miners and the police - the worst occuring at the Battle of Orgreave.
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- The selling of government owned businesses, fully or in part to private buyers and investors.
- This was carried out in order to allow a greater number of ordinary people the chance to become shareholders.
- Thatcher privatised a number of enterprises, e.g electricity, water & British steel.
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Taxation - poll tax
- Originally, people paid tax dependent on their housing. The plan was to now tax people not property.
- Thatcher introduced a flat rate that every adult had to pay, regardless of income.
- This was viewed as a 'tax on the poorest' and a 'hubris' (punishment for ignorance).
- The poll tax created great social unrest, and resulted in riots in London.
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