Abstract
British governments have long struggled with the relationship between the domestic and the world economies. Thus, many governments have failed to resolve the ‘trilemma’, the trade-off between the variables of exchange rates, capital movements and domestic policy.1 Certainly, the economic debates of the Thatcher governments featured increasingly vehement arguments about the stance that Britain should adopt towards the rest of the economic world. In the early years, sterling appreciated rapidly. Many, at the time and subsequently, thought that this was a major factor in the return of mass unemployment.2 The Thatcherites — a then minute group of politicians and economists — came under fierce attack for their apparent indifference to the sharp rise in the rate of both sterling and unemployment. Subsequently, the Thatcherites turned on each other over the relationship of sterling to the DM, and whether Britain should join the EMS. The strongest advocates of ‘shadowing’ the DM, and joining the EMS, were those who had withstood the earlier storms, in particular Howe and Lawson.3 Thatcher resisted these arguments, and denounced at Bruges ‘a European super-state exercising a new dominance from Brussels’.4
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes
There is a substantial literature on this, but for a recent summary, see, for example, Martin Daunton, ‘Presidential Address: Britain and Globalisation since 1850: I. Creating a Global Order, 1850–1914’, Transactions of the Royal Historical Society, Sixth Series, vol. 16 (2006) pp. 1–38.
For a defence of the government’s policy, see, for example, Lawson, The View from No.11, pp. 55–60; for a critique, see, for example, Philip Stephens, Politics and the Pound: The Tories, the Economy and Europe (London, 1997) p. 17.
For the development of Euroscepticism, and division over Europe, see, for example, Howe, Conflict of Loyalty, pp. 533–541, 574–575; Steve Ludlam, ‘The Spectre Haunting Conservatism: Europe and Backbench Rebellion’, pp. 98–120, in S. Ludlam, and M. Smith (eds) Contemporary British Conservatism (Basingstoke, 1996).
John Turner, The Tories and Europe (Manchester, 2000) esp. pp. 1, 9.
Edward Heath, speaking in 1961, quoted in Edward Heath, Our Community (London, CPC, 1977) p. 3.
For a recent and detailed review of the UK’s relationship with the EEC, see Stephen Wall, The Official History of Britain and the European Community. vol. II, From Rejection to Referendum, 1963–1975 (London, 2013).
British observer, June 1955, quoted in Emmanuel Apel, European Monetary Integration 1958–2002 (London, 1998) at pp. 5/6.
In November 1955, the Economic Policy Committee, not the full Cabinet, decided not to join, neither Eden nor Macmillan attending the meeting: Martin Dedman, The Origins and Development of the European Union, 1945–95: A History of European Integration (London, 1996) p. 107.
Wendy Brusse, Tariffs, Trade, and European Integration, 1947–1957: from Study Group to Common Market (Basingstoke, 1997) pp. 169/170.
Simon Bulmer, ‘Britain and European Integration: of Sovereignty, Slow Adaptation and Semi-detachment’, pp. 1–29, in Stephen George (ed.) Britain and the European Community: The Politics of Semi-detachment (Oxford, 1992) at p. 7.
See Lynton Robins, The Reluctant Party: Labour and the EEC, 1961–1975 (Ormskirk, 1979).
Gaitskell at the 1962 Party Conference, quoted in Brian Brivati, Hugh Gaitskell (London, 1997, paperback edn) p. 414. Others who took a similar line included Shore and Jay.
Only eight Tories were against: Stephen George, An Awkward Partner (Oxford, 1998, 3rd edn) p. 92.
See generally: Helen Papaconstantinou, Free Trade and Competition in the EEC: Law, Policy and Practice (London, 1988) pp. 202/203.
Jean Monnet, ‘A Ferment of Change’, 1 Journal of Common Market Studies (1962) pp. 203–211, p. 208.
EMU, although not formally part of the entry negotiations in 1971, was discussed during these negotiations: Simon Young, Terms of Entry; Britain’s Negotiations with the European Community, 1970–1972 (London, 1973) pp. 208/209.
One Nation Group of MPs, One Europe (London, CPC, 1965) p. 10.
Nigel Lawson, ‘The need for a National Policy’ in Conservatism Today: Four Personal Points of View (London, CPC, 1966) pp.47–63, at p.60. ‘The cold douche’, or similar, was a recurrent metaphor.
Nicholas Ridley, Towards a Federal Europe (London, 1969).
Hugo Young, This Blessed Plot: Britain and Europe from Churchill to Blair (London, 1998) pp. 247–252.
Richard Kelly, ‘The Party Conferences’ in A. Seldon and S. Ball (eds) Conservative Century: the Conservative Party since 1900 (Oxford; New York, 1994) pp. 221–260, at p. 250.
Christopher Lord, British Entry to the European Community under the Heath Government of 1970–4 (Aldershot, 1993) pp. 99–105.
Conservative Research Department, Britain in Europe (London, 1975).
See Peter Blaker et al. Europe Right Ahead (London, Conservative Political Centre, 1978) p. 34.
See Geoffrey Rippon, Our Future in Europe (London, CPC, 1974) at pp. 17–23.
Robert Jackson, The Powers of the European Parliament (London, CGE, 1977) p. 4.
Philip Goodhart, Full-hearted Consent: The Story of the Referendum Campaign and the Campaign for the Referendum (London, 1976) pp. 122–24, 130–131.
Tindemans was in the process of preparing a report to the European Council: Leo Tindemans, Report by Mr. Leo Tindemans, Prime Minister of Belgium, to the European Council. Bulletin of the European Communities, Supplement 1/76. (European Commission, 1975).
Conservative Party, Conservative Manifesto for Europe, 1979 (Conservative Central Office, London, May 1979) pp. 16–18.
Enoch Powell, The Common Market: the Case Against (Kingswood, 1971) p. 111.
Enoch Powell, A Nation or No Nation?: Six Years in British Politics (London, 1978) p. 140.
The Spectator, Editorial, 10.7.71, p. 83; Anti Common Market League literature quoted in Uwe Kitzinger, Diplomacy and Persuasion: How Britain Joined the Common Market (London, 1973) p. 233; Keep Britain Out literature quoted in ibid. p. 247.
Roger Jowell and Gerald Hoinville (eds) Britain into Europe: Public Opinion and the EEC 1961–75 (London, 1976) p. 89.
Anthony Forster, Euroscepticism in Contemporary British Politics: Opposition to Europe in the British Conservative and Labour Parties since 1945 (London, 2002) p. 52.
John Biffen, Political Office or Political Power? (London, CPS, 1977) p. 7.
Douglas Hurd, Memoirs (London, 2004, paperback edn) p. 271.
Arthur Aughey, Conservative Party Attitudes Towards the Common Market (Hull Papers in Politics, no. 2, Hull, 1978) p. 22.
See Office for National Statistics, United Kingdom Balance of Payments: The Pink Book, 2008 Edition (London, 2008) Table 1.1, p. 27.
For a flavour, see Samuel Brittan, (Roger Middleton (ed.) Inside the Department of Economic Affairs: Samuel Brittan, the Diary of an ‘Irregular’, 1964–6 (Oxford, 2012) entry for 26.7.65, p. 103.
Roy Jenkins, quoted in Catherine Schenk, The Decline of Sterling: Managing the Retreat of an International Currency, 1945–1992 (Cambridge, 2010) p. 156.
Anthony Barber, Taking the Tide: a Memoir (Norwich, 1996) p. 116.
See A.P. Thirlwall and H. Gibson, Balance-of-Payments Theory and the United Kingdom Experience (4th edn, Basingstoke, 1992) pp. 247–249.
For a first hand account, see Paul Volcker and Toyoo Gyohten, Changing Fortunes: The World’s Money and the Threat to American Leadership (New York, 1992) pp. 59–100.
See, for example, Andrew Shonfield, ‘International Economic Relations of the Western World: An Overall View’, pp. 1–140, in A. Shonfield, et al. International Economic Relations of the Western World: Politics and Trade (London, 1976) esp. pp. 109–114.
Sidney Golt, The GATT Negotiations, 1973–79: the Closing Stage (London, 1978) p. 31.
See, for example, John Eaton, An Alternative Economic Strategy for the Labour Movement (Nottingham, 1975).
Roy Harrod in 1968, quoted in Karin Kock, International Trade Policy and the GATT 1947–1967 (Stockholm, 1969) at pp. 282/3.
W.M. Corden, Import Controls versus Devaluation and Britain’s Economic Prospects (London, 1975) p. 1.
Samuel Brittan, The Price of Economic Freedom: a Guide to Flexible Rates (London, 1970) p. xi.
Hugh Corbet, On How to Cope with Britain’s Trade Position (London, 1977) pp. 69–72.
Tim Congdon, Against Import Controls (London, CPS, 1981) esp. pp. 24–41.
Corbet, et al. On How to Cope with Britain’s Trade Position, p. 33; Colin Clark, The Balance of Payments: Or Are Import Restrictions Necessary? (London, Overseas Trade Research Fund of the Economic Research Council, 1977) p. 28.
Conservative Research Department, The Campaign Guide 1977 (London, 1977) pp. 264/265.
John Biffen in 1982, quoted in Harry Shutt, The Myth of Free Trade: Patterns of Protectionism since 1945 (Oxford, 1985) p. 161.
John Odling-Smee and Nicholas Hartley, Some Effects of Exchange Rate Changes (Treasury Working Paper no. 2, London, 1978).
As to which, see Charles Geisst, Exchange Rate Chaos: Twenty-five Years of Finance and Consumer Democracy (London, 1995) pp. 72–77;
Nicholas Mayhew, Sterling: The Rise and Fall of a Currency (London, 1999) pp. 264–265.
See Forrest Capie, The Bank of England: 1950s to 1979 (Cambridge, 2010) p. 742.
See, for example, Bank of England Quarterly Bulletin, vol. 17, no.3 (Sept. 1977) pp. 285/286 and vol. 18, no. 4 (Dec. 1978) p. 534.
See CRD Brief, ‘Industry and Small Businesses’, 7.11.77, at CRD B/4/4; Confederation of British Industry, Business Views on Exchange-rate Policy (London, 1978).
Patrick Minford, Substitution Effects, Speculation and Exchange Rate Stability (Amsterdam, Oxford, 1978) p. 7.
Pieter Korteweg, Exchange-rate policy, monetary policy and real exchange-rate variability (Princeton, 1980).
Nigel Lawson, Thatcherism in Practice: A Progress Report (London, 1981).
For the background, see Economic Intelligence Unit, ‘The UK exchange control: a short history’, pp. 245–260, in Bank of England Quarterly Bulletin, vol. 7, no. 3 (1967).
See, for example, Hartley Shawcross, et al. Overseas Investment or Economic Nationalism? (London, IEA, 1967);
Robert Miller and John Wood, Exchange Control for Ever? (London, IEA, 1979). Howe regarded this ‘splendid’ pamphlet as helpfully setting out the arguments: Howe, Conflict of Loyalty, p. 141.
Conservative Research Department, Campaign Guide for Europe 1979 (London, 1979) p. 216.
For a balanced, but not uncritical, appraisal of capital controls, see Alec Cairncross, Control of Long-Term International Capital Movements (Washington, 1973) esp. pp. 53–80, 100.
Sideek Mohamed, European Community Law on the Free Movement of Capital and the EMU (Stockholm, 1979) p. 233.
Thus, Friedman said in 1973 of ‘the snake’, the forerunner of the EMS, ‘within a year the system of fixed exchange rates … will break down. This will demonstrate that even variations of the fixed exchange rate system are not viable’: quoted in Rainer Hellmann, Gold, the Dollar and the European Currency Systems: the Seven Year Monetary War (New York; London, 1979) p. 19.
See Peter Ludlow, The Making of the European Monetary System: A Case Study of the Politics of the European Community (London, 1982) Chapter 1.
For a discussion of this point, see Jacques Melitz, Monetary Discipline, Germany and the European Monetary System (London, 1987).
See, for example, Charles Goodhart, Money, Information and Uncertainty (London, 1976) esp. pp. 214–248; Memo by Goodhart discussing a Bow Group Paper on monetary policy, 16.12.77, BANK 6A50/24;
Douglas Wass, ‘The Changing Problems of Economic Management’, Economic Trends (1978) vol. 293, 97–105;
Gordon Richardson, ‘First Mais Lecture’, 9.2.78, pp. 51–58, in The Development and Operation of Monetary Policy 1960–1983: A selection of Material from the Quarterly Bulletin of the Bank of England (Oxford, 1984).
See Note, Joseph to Thatcher and Howe, 27.2.78, discussing a Minute by Adam Ridley, which commented on the Wass and Richardson lectures referenced in the previous footnote: THCR 2/1/1/39. Wass was ‘very hostile and suspicious’ towards the new government in 1979: Butler Interview. See also, Wass, Decline to Fall (Oxford, 2008) pp. 355/356.
They were certainly not alone in thinking this: see, for example,: M. Emerson, ‘The United Kingdom and the European Monetary System’, pp. 66–82, in R. Major (ed.) Britain’s Trade and Exchange-Rate Policy (London, 1979).
Smethwick Labour Exchange Report in 1955, quoted in Satvinder Juss, Immigration, Nationality and Citizenship (London, 1993) pp. 74/75.
Mark Pitchford, The Conservative Party and the Extreme Right, 1945–75 (Manchester, 2011) pp. 75, 81, 172.
See, for example, Monday Club, A Monday Club Memorandum on Immigration Into the UK (London, 1965).
Monday World (Summer 1971) Editorial, p. 2. See also Patrick Wall, ‘Apartheid’, Solon: A Right Wing Journal, vol. 1, no. 4 (Oct. 1970) pp. 27–32.
Author information
Authors and Affiliations
Copyright information
© 2015 Adrian Williamson
About this chapter
Cite this chapter
Williamson, A. (2015). Britain’s Role in the World Economy. In: Conservative Economic Policymaking and the Birth of Thatcherism, 1964–1979. Palgrave Studies in the History of Finance. Palgrave Macmillan, London. https://doi.org/10.1057/9781137460264_7
Download citation
DOI: https://doi.org/10.1057/9781137460264_7
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-68974-3
Online ISBN: 978-1-137-46026-4
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)