"Goodbye, Great Britain" The 1976 IMF Crisis Kathleen Burk, Alec Cairncross

Publication date:
19 Feb 1992
Yale University Press
290 pages: 234 x 156 x 17mm
black & white illustrations

In March 1976 the value of the British pound began to slide. The slide turned into a rout and triggered an economic and political trauma. By September confidence in the pound had collapsed. In April 1975 the 'Wall Street Journal' had run the headline 'Goodbye, Great Britain', advising investors to get out of sterling. The British Labour government under its new Prime Minister James Callaghan was forced to seek help from the International Monetary Fund, a familiar option for Third World countries but highly unusual for a developed western economy. This expert new study uncovers the roots of the most searing economic crisis of postwar Britain. The weakness and instability of the British economy in the mid-1970s, the consequence in part of the 1973 rise in oil prices, raised international alarm. The US government in particular feared economic crisis would drive Britain into a left-wing siege economy, endangering NATO and the EEC. Anticipating the danger, the US Treasury set out to force Britain to make major domestic policy changes. The sterling crisis provided the opportunity. The IMF provided the weapon. Arriving in London in November 1976, the IMF mission announced that the price for the loan included deep cuts in public expenditure. The consequent political crisis was fought out in private and in public, amongst members of the British Cabinet, the Labour Party, the Treasury and the Bank of England. It involved the US President, Treasury and State Department, the Federal Reserve, the German Chancellor and the Bundesbank. Burk and Cairncross uncover the efforts of the Labour government to escape the IMF conditions. They also examine the political agenda, the loss of economic control, the rise of monetarist ideas and the change in the climate of opinion. Juxtaposing gripping narrative with expert analysis, the book provides surprising answers to critical questions and reveals how the breakdown of the postwar consensus on macro-economic management paved the way for the triumph of Thatcherism. Kathleen Burk, educated at Berkeley and Oxford, lectured in history at University College, London. She is the author of 'Britain, America and the Sinews of War, 1914-1918', 'The First Privatisation: Politicans, the City and the Denationalisation of Steel', 'Morgan Grenfell 1838-1988: the Biography of a Merchant Bank', and 'Troublemaker: the Life and History of A. J. P. Taylor'. Sir Alec Cairncross divided his career between academic life and government service. He served in four different government departments, including nearly eight years in the Treasury, first as Economic Adviser to the British government and later as first head of the Government Economic Service. In Washington DC he worked with the World Bank as the first director of the Economic Development Institute (1955-6). He was Master of St. Peter's College, Oxford, from 1969 to 1978, and went on to be Chancellor of Glasgow University. He is the author of numerous books and articles on economic affairs.

"There are very few moments in post-war British history to which the clich‚ of a 'benchmark' can be applied with total certainty. The currency crisis of the autumn of 1976 was without doubt one of them."?Peter Hennessy

"This fascinating new study uncovers the detail of one of the most traumatic economic and political crises of British 20th century history. . . .The whole book is highly relevant background to the problems facing the government in running Britain's inflation-prone economy."?Banking World

"This scholarly but readable book is an important contribution to the study of economic policy."?George Peden, Book Review Digest

"Using private papers and diaries, interviews, and published materials, they provide not only a fascinating detailed narrative of the crisis and its resolution but also a somewhat detached, backward-looking assessment of the forces at work. . . . One of the best studies of its kind, it will find use in many courses, particularly those with a political economy slant."?D.E. Moggridge, Choice

"A model of how good contemporary history can be written in the absence of Cabinet and private papers. . . . So thorough that it seems unlikely that it will require significant revision when the Cabinet papers appear in 14 years time. . . . One of the best short analyses available of post-war economic policy, and it is written in easily comprehensible and non-technical language. . . . Indispensable not only to the serious student of contemporary history, but to anyone who seeks to understand modern Britain."?Vernon Bogdanor, Contemporary Record

"This book will remain indispensable for its treatment of the economic troubles of the 1970's and the financial context for Thatcherism."?Philip Williamson, Economic History Review

"A timely and exceptionally interesting book. . . . [Dr. Burk] probably has a better feel for the details of the IMF intervention than anyone; Sir Alec Cairncross writes with the authority one would expect from someone who is not only a distinguished academic economist but a former civil servant who knows the Treasury's little ways. . . . informative and incisive."?Ross McKibbin, London Review of Books

"[A] brilliantly clear and concise examination. . . . Kathleen Burk and Sir Alec Cairncross map out every contour of the contemporary debate, and skillfully weigh the consequences."?Ben Pimlott, New Statesman & Society

"Compelling."?Peter Oppenheimer, Observer

"This definitive account of the 1976 sterling crisis is not only fascinating in itself: it is essential background to the problems now facing either party in running Britain's inflation-prone economy."?William Keegan, Economics Editor, Observer

"The most complete account yet of the 'high politics' of the IMF crisis."?Steve Ludlam, Political Studies