1. History

2. Outcome

3. References

4. Further reading

The 1976 IMF Crisis was a financial crisis in the United Kingdom in 1976 which forced James Callaghan's Labour Party government to borrow $3.9 billion (${{Format price|{{Inflation|US|3900000000|1976}}}} in {{Inflation-year|US}}){{Inflation/fn|US}} from the International Monetary Fund (IMF),^[1] the largest loan ever to have been requested from the IMF.^[2]

History

The IMF Crisis took place during James Callaghan's term as Prime Minister,^[3] and caused the Bank of England to withdraw temporarily from the foreign exchange market.^[4] After the defeat of the public expenditure white paper in the House of Commons in March 1976 and the resignation of Harold Wilson, many investors became convinced the pound would soon lose value due to inflation. By June 1976, the pound had reached a record low against the dollar.^[2]

Outcome

Only half of the loan was actually drawn by the UK government and it was repaid fully by 4 May 1979^[5]. Denis Healey, the Chancellor or the Exchequer at the time, went on to state that the main reason the loan had to be requested was that public sector borrowing requirement figures provided by the treasury were grossly overstated.^[6] Despite this all terms required by the IMF were fully implemented.

The IMF loan meant that the United Kingdom's economy could be stabilised whilst drastic budget cuts were implemented. Even with the loan's security, the Labour Party had already begun unravelling into camps of social democrats and left-wing supporters, which caused bitter rows inside the party and with the unions. Many believe this may have contributed significantly to Margaret Thatcher's 1979 Conservative victory.^[7]

References

Further reading

• Burk, Kathleen. "1976 IMF Crisis." (1989): 39-45.
• Ludlam, Steve. "The gnomes of Washington: Four myths of the 1976 IMF crisis." Political Studies 40.4 (1992): 713-727.
• Wass, Douglas. Decline to Fall: The Making of British Macro-economic Policy and the 1976 IMF Crisis: The Making of British Macro-economic Policy and the 1976 IMF Crisis. Oxford University Press, 2008.
• {{cite book|author=Kevin Hickson|title=The IMF Crisis of 1976 and British Politics: Keynesian Social Democracy, Monetarism and Economic Liberalism: the 1970s Struggle in British Politics|url=https://books.google.com/books?id=kstOuQ0qJoEC&pg=PA14|date=13 May 2005|publisher=I.B.Tauris|isbn=978-1-85043-725-3|pages=14–}}
• {{cite book|author1=Kathleen Burk|author2=Alec Cairncross|title=Good-bye, Great Britain: The 1976 IMF Crisis|url=https://books.google.com/books?id=YamJGlX2_vkC|year=1992|publisher=Yale University Press|isbn=0-300-05728-8}}
• {{cite book|author=Mark D. Harmon|title=The British Labour Government and the 1976 IMF Crisis|url=https://books.google.com/books?id=NhJtQgAACAAJ|year=1997|publisher=Macmillan|isbn=978-0-333-67818-3}}

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