The Death of Margaret Thatcher and Her Impact on Today’s Economy

Thatcher

Margaret Thatcher, the Iron Lady and the first female prime minister of Britain and among the most divisive and influential political leaders in the country died at the age of 87 on Monday, April 8 after suffering a severe stroke. She had been in declining health for more than a decade and stayed at the Ritz hotel in London while recovering from a minor operation.

Since her death was announced by her children, tributes have flooded in from around the world. Leaders from different countries have expressed their admiration for everything she has done to change the way people view politics. Within a decade, Thatcher became known around the world, admired and detested for her implacable attitudes in foreign policy, pro-market domestic reforms including her battle with the IRA which almost killed her in 1984.

Heightened by the newly arrived revenues from the North Sea oil fields of Britain, she had room to move and modify the ageing industrial economy and took advantage of the opportunity to put her enemies down. She also organised the notorious sandbagging in the EU to acquire a British rebate which she called as “my money”. She did not succeed in fending the centralising ambitions of the Belgian empire as how she described the European commission most especially during those times when a Jacques Delors headed it.

She introduced a series of economic and political initiatives to overturn high unemployment and the struggles of Britain in the wake of ‘The Winter of Discontentment’ and economic recession. Thatcher’s economic policies and political philosophy centered on deregulation, privatisation of state owned companies, flexible labor market and dropping influence and power of the trade unions. Her popularity during her first years in the office diminished amid high unemployment and recession until the economy recovered; also the Falklands War of 1982 had brought a rebirth of support which resulted in her re-election in the following year.

The economic policy of Margaret Thatcher was influenced by economists. She reduced direct taxes on income and increased the indirect taxes. She also increased the rates of interest to slow money lending and thereby reduce inflation. She also introduced cash limits regarding public spending and lowered expenditure on social services like housing and education.

The UK started to experience the indications of economic recovery by 1982, inflation was reduced to 8.6% from a staggering 18% but unemployment was more than three million for the first time. By the following year, the growth of the economy was stable and stronger and mortgages as well as inflation rates were at their lower levels, though manufacturing output had reduced by 30% since 1978 and the rate of unemployment remained high which peaked at 3.3 million in the year 1984.
Three years later, unemployment was falling, inflation was low and the economy was strong. Opinion polls demonstrated a comfortable Conservative lead and local council election results were successful as well which prompted her to call general election for June 11 of the same year, amidst the election deadline being twelve months away. For the third successive term, Thatcher was re-elected.