In her memoirs, Margaret Thatcher stresses that in the years between 1975 and 1979 ‘the foremost issue was how to deal with inflation’. In retrospect, ‘dealing with inflation’ can indeed be seen as central to Thatcherite economic ideas and policy, and for three reasons. Most generally, the central strategic thrust of the Conservatives from 1975 was to treat all economic problems not as the result of conjunctural events or specific policy failings, but as symptoms of a profound, long-term malaise in the British economy and British society. In this ‘declinist’ approach, the inflation of the 1970s was not a contingent or transient problem, but a crucial part of the evidence of a national pathology, requiring a complete rethink in the approach to economic issues. Hence inflation was central to the Thatcherite claim that only a radical new start could save Britain from ever-worsening decline.

Second, inflation was crucial to the debate about monetarism. The precise meaning of this much-contested term is returned to below, but there is no doubt that what made emphasis on monetary issues central to Thatcherite economic policy was its link to the priority accorded to reducing inflation. Without the rapid inflation of the 1970s, monetarism would not have become the centrepiece of debate.