Why the 1976 IMF crisis is not really relevant

We live in febrile times with talk of civil war and the Government imploding.  I saw the other day that three quarters of Labour MPs would lose their seats if there was a general election tomorrow.   However, there isn't going to be a general election tomorrow or even next month which is a problem with a lot of contemporary commentary.

The mainstream media says that it is boosting Reform because it is 'making the political weather', but there is an interesting cause and effect relationship here: the media largely ignores the Lib Dems (70+ MPs), the Greens (as many MPs as Reform and more councillors) and Plaid Cymru (the equivalent number of MPs).

However, right-wing commentators believe that somehow the Government is going to implode and Labour MPs will vote like turkeys for an early Christmas.

The most popular scenario is that the Government will be brought down by a fiscal crisis.  Government borrowing costs are rising, but that is happening in a number of countries, not least France which faces a real government and governing crisis.   Trump's attack on the idea of an independent central bank certainly does not help.

Commentators are raising the spectre of the 1976 IMF intervention, but this is problematic on two fronts.  First, subsequent archival research has shown that the economy was not in as a bad a state as was claimed at the time and what one had (to simplify) is the Treasury pushing its agenda.   I refer you to   Chris Rogers,‘The Politics of Economic Policy Making in Britain: A Re-assessment of the 1976 IMF Crisis’ Politics & Policy, 37(5), 971-994.

I should disclose that I was supervisor of Chris's PhD along with Pete Burnham.

The second consideration is that, as an eminent American economist discussed on Radio 4 this morning, dollar reserves were then more important to us: indeed, they were more important to everyone.  The dollar looks quite likely to decline as an international reserve currency, in part as a consequence of current US economic policy.

I certainly do not rule out a Reform government after the next election, although much could change including a Conservative revival under generic leadership.   However, the example of Warwickshire shows that the Conservatives seem happy to be supine when dealing with Reform.