Expansionary Fiscal Contraction
The Thatcher Government's 1981 Budget in Perspective

This unique collection recasts a critical episode in post-war British economic history with profound implications for today's policy makers.

Duncan Needham (Edited by), Anthony Hotson (Edited by)

9781107042933, Cambridge University Press

Hardback, published 15 September 2014

251 pages, 9 b/w illus. 10 tables
23.4 x 15.5 x 1.7 cm, 0.5 kg

'This book makes an invaluable - indeed unique - contribution to the appraisal, not just of the 1981 Budget, which is its purpose, but of the whole edifice of thinking and analysis which underlay it. Indeed it raises in a fundamental form the question of what today the basis of macro-economic policy should be, if in fact there is any such thing. It is written by a variety of authorities - academics, journalists and former civil servants - and each brings to the discussion a perspective and insight which it would be difficult to match; and their conclusions, though by no means unanimous, are rigorously argued and well presented. This is a book not just for the academic specialist but for the general public as it struggles to understand how governments today make economic policy.' Sir Douglas Wass, former Permanent Secretary to the Treasury

In its 1981 Budget, the Thatcher government discarded Keynesian counter-cyclical policies and cut Britain's public sector deficit in the depths of the worst UK recession since the 1930s. Controversially, the government argued that fiscal contraction would produce economic growth. In this specially commissioned volume, contributors examine recently released archives alongside firsthand accounts from key players within No. 10 Downing Street, HM Treasury and the Bank of England, to provide the first comprehensive treatment of this critical event in British economic history. They assess the empirical and theoretical basis for expansionary fiscal contraction, drawing clear parallels with contemporary debates on austerity in Europe, USA and Japan in the wake of the recent global financial crisis. This timely and thoughtful book will have broad appeal among economists, political scientists, historians and policy makers.

Foreword Geoffrey Howe
1. The 1981 statement by 364 economists Robert Neild
2. The 1981 Budget: how did it come about? Tim Lankester
3. The London Business School and the 1981 Budget Alan Budd
4. The 1981 Budget: a view from the cockpit Adam Ridley
5. The Bank of England and the 1981 Budget Charles Goodhart
6. 1981 and all that William Keegan
7. The origins of the Budget in 1980 Christopher Collins
8. The 1981 Budget and its impact on the conduct of economic policy: was it a monetarist revolution? Anthony Hotson
9. The 1981 Budget: 'a Dunkirk, not an Alamein' Duncan Needham
10. Macro-economic policy and the 1981 Budget: changing the trend Ray Barrell
11. The Keynesian twin deficits in an inflationary context Robert Z. Aliber
12. The long road to 1981: British money supply targets from DCE to the MTFS Michael J. Oliver
List of names
Chronology of events
Official sources
Bibliography of secondary sources
Index.

Subject Areas: Monetary economics [KCBM], Macroeconomics [KCB], Politics & government [JP]