Key economic events - 1955-1979

The UK economy - the past forty years

This page gives a brief summary of key economic events in each of the years from 1955 to 1979. You can either scroll down the page to see what happened, or follow the links below to a particular year.

25 Feb Hire purchase controls reintroduced.
6 Apr Anthony Eden succeeds Winston Churchill as Prime Minister.
26 May General Election: Conservatives returned with overall majority increased to 59 from 17.
27 Oct Budget: tax on distributive profits raised by 5 percentage points to 27.5%, purchase tax rates raised - 25% to 30%, 50% to 60% and 75% to 90%.
14 Dec Clement Attlee resigns as leader of the Labour Party. Hugh Gaitskell succeeds.
17 Apr Budget: inducements for private savings, including the introduction of Premium Bonds; announcement of forthcoming reductions in government expenditure; tax on distributive profits raised by 2.5 percentage points to 30%.
26 Jul President Nasser of Egypt announces the nationalisation of the Suez Canal Company and the seizure of its assets.
2 Aug Restrictive Practices Act becomes law.
3 Oct British outline plan for a European Free Trade Area (EFTA) announced.
31 Oct UK and France issue ultimatum for Egypt and Israel to retreat from the Suez Canal, threatening military action. Israel agrees, Egypt resists.
3 Nov Suez Canal blocked by fighting.
6 Nov From midnight London time Suez ceasefire effective.
13 Jan Anthony Eden resigns in the aftermath of the Suez crisis, citing ill health. Harold Macmillan becomes Prime Minister.
7 Mar Suez Canal re-opened.
25 Mar Treaty of Rome establishing the European Economic Community (EEC) signed.
31 Mar End of rationing for diesel oil.
9 Apr Budget: following the disinflationary policies of the previous eighteen months the Chancellor eases policy; purchase tax reduced on some household goods.
12 Aug Council on Prices, Productivity and Incomes ('Three Wise Men') set up. (Disbanded in 1961)
15 Apr Budget: essentially neutral; new single rate of profits tax at 10%.
3 Jul Ceiling on total bank advances to be abolished. Proposals for special deposits announced.
29 Oct All hire purchase controls removed.
7 Apr Budget: the Chancellor refers to two years of strong personal savings and moves towards stimulatory measures for economic production; standard rate of income tax lowered to 38.75% from 42.5% and each of reduced rates lowered by 2.5 percentage points.
21 Jul EFTA: broad agreement reached - tariffs to be cut 20% on 1 July 1960.
20 Aug Report of the Radcliffe Committee on the working of the monetary system concludes, inter alia, 'monetary measures cannot alone be relied on to keep in fine balance an economy subject to major strains from both without and within. Monetary measures can help, but that is all'.
8 Oct General Election: Conservatives returned with overall majority increased to 102 from 60.
4 Apr Budget: the Chancellor seeks to moderate economic expansion, combining fiscal policy with the 1 percentage point increase to 5% in the bank rate on 21 January 1960; profits tax raised to 12.5% from 10%; the number and sizes of Premium Bonds' prizes increased.
28 Apr Credit squeeze: hire purchase restrictions reimposed; first call for special deposits.
14 Sep The Organisation of Petroleum Exporting Countries (OPEC) founded.
14 Dec The Charter of the new Organisation for Economic Co-operation and Development (OECD) is signed by the US, Canada and eighteen European countries.
17 Apr Budget: measures introduced to enable the Chancellor at any time to vary purchase tax and other main duties; profits tax raised to 15% from 12.5%; car licence duty increased to £15 from £12.10s.
25 Jul 'Mini' Budget: Pay Pause measures announced - brake on wages in the public sector (government hopes that private sector will follow suit); bank rate raised to 7% from 5% and further call for special deposits; 10% surcharge on Customs and Excise duties.
4 Aug The IMF makes a credit of £714 million to the UK.
8 Aug TUC and four national employers' organisations receive invitations from the Chancellor to join National Economic Planning Council.
10 Aug The UK applies to join the EEC.
16 Aug Government extends Pay Pause to 3.5 million workers in private industry where minimum wages are fixed by Wages Councils.
2 Feb Incomes Policy: The Next Step published. Average pay rise should be limited to 2.0%-2.5% a year.
7 Mar First meeting of National Economic Development Council (NEDC).
31 Mar End of Pay Pause, to be succeeded by wage restraint policy.
9 Apr Budget: theme is the maintenance of a firm basis for sound economic expansion.
1 Oct National Incomes Commission set up.
29 Jan Negotiations over the UK's entry to the EEC terminate after a French veto.
14 Feb Harold Wilson becomes leader of the Labour Party following the death on 18 January of Hugh Gaitskell.
3 Apr Budget: expansionary; income tax: increases in personal allowances and modification of reduced rate bands to 20% on first £100 of taxable income and 30% on next £200 of taxable income, 3.75 million freed from paying income tax; increases in allowances on industrial building and assistance for development districts.
15 Apr NEDC publishes report - Conditions Favourable to Faster Growth - stressing the need for more education and training, an incomes policy and measures to promote regional development (some taken in Budget on 3 April).
10 May EFTA agrees to eliminate industrial tariffs between member countries by the end of 1966.
19 Oct Lord Alec Douglas-Home becomes Prime Minister, replacing Harold Macmillan who resigned on grounds of ill health.
12 Nov Prime Minister Sir Alec Douglas-Home enters House of Commons after winning the Kinross and West Perthshire by-election.
22 Nov President Kennedy assassinated.
14 Apr Budget: deflationary; increases in indirect taxes, designed to lower the growth rate to 4% from the 5%-6% reached during 1963.
15 Oct General Election: Labour Party, led by Harold Wilson, succeeds the Conservative government, attaining an overall Commons' majority of 5.
26 Oct Publication of White Paper - The Economic Situation - announcing measures for reducing the balance of payments deficit, including 15% import surcharge and export rebates.
11 Nov Chancellor James Callaghan presents a mini-Budget. He strives to reduce the PSBR. Increases announced in petrol duty, employers' National Insurance Contributions and income tax. From April 1965 the standard rate of income tax to rise to 41.25% from 38.75% (no change in the reduced rates).
25 Nov Bank of England announces arrangements for credits of $3 billion from foreign central banks.
8 Dec Bank of England directs banks to curb advances for property development, hire purchase and personal use.
16 Dec Joint 'statement of intent' on an incomes and prices policy signed by the government, TUC and employers' organisations.
10 Feb Bank of England confirms $3 billion of credits made on 25 November 1964 by foreign central banks and a prospect of further drawings from the IMF in the spring.
11 Feb White Paper - Machinery of Prices and Incomes Policy - published after discussion with employers and trades unions.
22 Feb Chancellor announces that between 1964/65 and 1969/70 the growth of public expenditure (excluding investment of the nationalised industries) is to be related to the prospective increase in national production, which he judges will mean an average increase in real terms of 4.25% per annum.
17 Mar Economic Council of TUC agrees to 3.0%-3.5% norm for wage increases proposed by National Board for Prices and Incomes.
6 Apr Budget: measures introduced to raise tax revenue. Proposals announced for new corporation tax to replace company income tax and profits tax, not likely to exceed 40%, to become operative in 1966. Stricter control of foreign investment and exchange announced.
27 Apr Import surcharge reduced to 10% from 15%.
29 Apr Bank of England calls for special deposits.
6 May Bank of England advises clearing banks that loans should not increase more than 5% in 1965/66.
12 May IMF agrees to a further drawing of $1.4 billion by the UK.
27 Jul Chancellor announces measures designed to improve balance of payments position, including cuts in public investment, reduced finance for imports and tighter exchange controls.
27 Jul Edward Heath becomes leader of the Conservative Party.
16 Sep Department of Economic Affairs publishes The National Plan.
17 Jan Publication of White Paper on investment incentives. Investment allowances to be replaced by 20% cash grants on new plant and machinery in manufacturing industry (40% in new Development Areas).
1 Feb Bank of England asks clearing banks to freeze advances at 105% of March 1965 level.
8 Feb Hire purchase controls tightened.
31 Mar General Election: the Labour majority rises to 97.
3 May Budget: the Chancellor aims to increase revenue. Corporation tax fixed at 40%. Selective Employment Tax (SET) to be introduced from 5 September. Introduction of betting and gaming tax.
13 Jun New credit arrangements of around $2 billion agreed at the annual meeting of the Bank for International Settlements.
29 Jun Barclays 'Barclaycard' credit scheme initiated.
20 Jul Prime Minister announces measures to alleviate continuing sterling weakness, including tightening of hire purchase restrictions; public investment cuts (of £150 million for 1967/68); voluntary price and wage freeze initiated.
29 Jul White Paper - A Statement on a Prices and Incomes Standstill - outlines plan for six months freeze.
10 Nov Prime Minister announces discussions with EFTA and the EEC on the UK entering the Common Market.
22 Nov Publication of White Paper - Statement on the Standstill: Period of Severe Restraint. Norm for increases nil from January 1967.
30 Nov Import surcharge abolished.
31 Dec Final 20% reduction to zero of EFTA internal tariffs on industrial goods.
7 Mar First landing of North Sea gas.
21 Mar Publication of White Paper on prices and incomes policy, proposing a year of moderation in price and wage increases after 30 June, with TUC and CBI voluntary vetting system replacing compulsory notification.
11 Apr Budget: neutral; 50% SET refund on part-time employees in service industries. Ceiling on bank advances lifted.
11 May The UK applies (for the second time) to join the EEC.
7 Jun Egypt closes Suez Canal, following the outbreak on 5 June of the 'six-day war' in the Middle East.
30 Jun Period of severe wage restraint ends; period of moderation follows with TUC vetting wage claims.
5 Sep IMF report warns the UK to keep tight incomes policy to strengthen international competitiveness.
27 Sep Government announces it will pay the National Coal Board to keep uneconomic pits open during winter in Development Areas.
18 Nov Devaluation of sterling from $2.80 to $2.40. Measures to improve the current account of the balance of payments: bank rate raised 1.5 percentage points to 8%; bank advances limited; hire purchase controls on cars tightened; defence spending reduced; export rebates withdrawn; $3 billion credits to be sought, including $1.4 billion from the IMF; corporation tax to be raised in the next Budget to 42.5% from 40% for 1967/68.
27 Nov French President De Gaulle vetoes the UK's second application to join the EEC.
29 Nov IMF agrees to $1.4 billion stand-by credit (see 18 November 1967).
21 Dec Chancellor announces £600 million further cuts in government spending and details of £71.5 million cuts in nationalised industry programme for 1968/69.
5 Jan Prime Minister announces 3.5% maximum for pay rises for year following July to TUC leaders.
16 Jan Prime Minister announces reductions in government expenditure of £700 million for 1968/69.
19 Mar Budget: deflationary; increases in purchase tax, excise duties and SET; one-year investment income levy introduced.
3 Apr White Paper - Productivity, Prices and Incomes Policy in 1968 and 1969 - unveils legislation to freeze wages for twelve months pending Prices and Incomes Board report, order price reductions, and control rents and dividends.
23 May Bank of England imposes 4% limit on growth of all private sector bank loans.
17 Jan White Paper - In Place of Strife: A Policy for Industrial Relations - published.
31 Jan Bank of England reminds banks that non-priority lending must be reduced.
15 Apr Budget: corporation tax raised to 45%, indirect taxes raised and the two lowest bands of income tax - first £100 of taxable income at 20% and next £200 of taxable income at 30% - merged into one single band of first £260 taxable income at 30%.
18 Jun Government drops proposed Industrial Relations Bill after agreement on activation of TUC - Programme for Action - with particular emphasis on Rule 11 covering intervention in unconstitutional strikes.
23 Jun Letter of Intent to the IMF: target of £300 million for current account surplus, limit of 1% on increase in real public spending in 1968/69 and Domestic Credit Expansion maximum for 1969/70 of £400 million.
12 Dec Publication of White Paper - Productivity, Prices, and Incomes, Policy after 1969 - promising legislation to merge Monopolies Commission and National Board for Prices and Incomes into Commission on Manpower and Industry and laying down 2.5%-4.5% range for wage increases.
14 Apr Budget: mildly expansionary; income tax: personal allowances raised, standard rate remains at 41.25%, reduced rate of 30% on first £260 taxable income abolished; rate of initial allowances for capital expenditure in 1970/71 and 1971/72 on industrial buildings and structures increased from 15% to 30% (40% in development areas, intermediate areas and Northern Ireland); £900 limit to Domestic Credit Expansion (DCE) for 1970/71, bank lending restrictions eased.
18 Jun General Election: Conservative Party, led by Edward Heath, succeeds Labour government, attaining an overall Commons' majority of 30.
19 Oct British Petroleum (BP) makes major oil find in UK sector of the North Sea.
27 Oct Budget: expenditure and tax reductions; from April 1971 the standard rate of income tax to fall to 38.75% from 41.25%; corporation tax to be reduced by 2.5 percentage points to 42.5%; IRC and Land Commission to be wound up.
29 Oct Special deposits (which are used to vary clearing banks' reserves and hence liquidity ratio to influence the money supply) with the Bank of England raised from 2.5% to 3.5%.
2 Nov Robert Carr, Secretary of State for Employment and Productivity, announces the winding up of the National Board for Prices and Incomes.
12 Nov Rolls-Royce to receive £42 million from government and £18 million from banks to cover increased cost of development of RB-211, subject to auditors' report.
3 Dec Government publishes Industrial Relations Bill, designed to improve industrial relations and based on the North American system of collective bargaining in which the law plays a prominent part. Pre-strike ballot, cooling off period required before any stoppage.
15 Feb Decimal currency introduced.
1 Mar Around 1.5 million workers stage a one-day strike in protest against Industrial Relations Bill. Motor industry, docks and newspapers worst affected.
30 Mar Budget: tax reforms announced: from April 1973 income tax and surtax will be replaced by graduated personal tax, and Selective Employment Tax (SET) and purchase tax will be replaced by Value Added Tax (VAT); corporation tax reduced to 40% from 42.5%.
14 Apr Bank of England publishes Competition and Credit Control. Proposals on control of the total money supply intended to stimulate more active competition between banks and on greater use of interest rates to control credit.
15 Jul Confederation of British Industry (CBI) makes major attempt to restrain price increases, provided government takes sufficient measures to reflate the economy. Industry to be asked for voluntary price restraint over the next twelve months or to limit increases to 5% or less in unavoidable cases.
19 Jul Mini-Budget: reduction in purchase tax rates, increase in first-year allowance for plant and machinery and abolition of hire purchase restrictions.
5 Aug Industrial Relations Act 1971 receives Royal Assent.
15 Aug End of the Bretton Woods era. Strain on fixed exchange rate system results in USA ending dollar/gold convertibility.
23 Aug Pound allowed to float.
31 Aug Exchange controls introduced to prevent non-residents from increasing holdings of short-term sterling securities. (Measures strengthened on 7 October 1971)
8 Sep Trades Union Congress (TUC) votes to oppose UK's entry into the EEC on the proposed terms.
10 Sep Bank of England announces new regime of more flexible control for banks and finance houses, from 16 September; all present 'ceiling' limits on lending to be removed, and all institutions will be required to observe a fixed minimum reserve ratio. (See 14 April 1971)
28 Oct Government EEC entry terms accepted by the House of Commons by 356 votes to 244.
9 Dec Miners' union executive votes unanimously for national strike (timed for 9 January 1972).
19 Dec General currency realignment under the Smithsonian Agreement. Substantial revaluation of all leading currencies except Canadian dollar. At later stage US government to recommend to Congress devaluation of the dollar against gold from $35 per ounce to $38 in return for trade concessions by EEC, Canada and Japan. New exchange rate fixed at $2.6057 to the pound, and special exchange control restrictions introduced on 31 August removed.
22 Dec Government announces grants of £27 million to British Rail Board and £7 million to National Bus Company for 1972, to enable them to keep price rises down to 5%.
9 Jan 280,000 miners begin pay strike and picketing at coal depots, open cast sites, ports and power stations.
20 Jan Government majority of 21 in Commons on signing of Treaty of Accession to EEC.
14 Feb 3-day working week for most of British industry begins, under government's State of Emergency, in attempt to conserve power supplies.
18 Feb Wilberforce Court of Inquiry ends six-week miners' strike with 22% pay increase recommendation.
28 Feb Miners return to work after accepting pay offer along the lines recommended by Wilberforce.
21 Mar Budget: new unified system of personal direct taxation, to begin in April 1973, a basic rate of 30% rising in steps to a maximum 75%; prescribed rate for VAT, to be introduced in April 1973, of 10%, with allowance to be made for alterations of rate in the range of 7.5%-12.5%; cut in rate of purchase tax on luxury goods.
24 Apr Instigation of snake-in-the-tunnel by which a narrow maximum 2.25% EEC band (the 'snake') is permitted to find its own market-determined level against the dollar band of maximum 4.5% (the 'tunnel').
1 May Sterling joins the EEC currency snake.
23 Jun Sterling comes out of the snake amid downward pressure and is allowed to float.
10 Jul CBI agrees to join government and TUC working party in attempt to find voluntary solution to problems of inflation and deteriorating industrial relations.
13 Jul CBI and TUC approve new voluntary conciliation and arbitration service, ACAS, to operate from 1 September 1972.
7 Aug Esso-Shell confirms discovery of major North Sea oilfield off Shetlands.
26 Sep Prime Minister's anti-inflation proposals announced: £2 a week limit on all pay rises; price rises to be kept within 5%; 5% per annum economic growth target for two years.
9 Oct Weekly bank rate announcement dropped. Minimum lending rate to be linked directly to the yield on Treasury bills.
3 Nov Breakdown of tripartite attempts to reach voluntary agreement to combat price and wage inflation (see 16 October 1972).
6 Nov Prime Minister introduces Counter-Inflation (Temporary Provisions) Bill. 90-day statutory standstill on most increases in pay, prices, rents and dividends.
9 Nov Bank of England calls for special deposits, removing about £220 million from the banking system during the following five weeks.
19 Dec White Paper on public expenditure to 1976/77 provides for annual average increase of 2.5% in real terms between 1972/73 and 1976/77.
21 Dec Bank of England calls for special deposits to take almost a further £450 million out of the banking system.
1 Jan The UK joins the EEC, along with Ireland and Denmark (joining West Germany, France, Belgium, the Netherlands, Italy and Luxembourg).
17 Jan White Paper Government Proposals for Second Stage for Programme Controlling Inflation. Pay increases to be restricted to £1 per week plus 4% (subject to a limit of £250 per annum) - 12-month rule - from April to November. Pay Board and Price Commission established. Counter-Inflation Bill to regulate prices, pay, dividends and rents for a three-year period. Wage standstill to terminate on 31 March. Standstill on prices to continue until the end of April.
13 Feb 10% devaluation of US dollar against the Special Drawing Right of the IMF announced. Sterling shows effective revaluation against the dollar of around 4%.
1 Mar Pay Board and Price Commission come into being.
4 Mar Nine EEC finance ministers decide to float their currencies against the dollar, sterling (with the Irish pound) and lira independently, as before, and others linked within 2.25% band. D.Mark to be revalued by 3% against present central rate (in terms of Special Drawing Rights).
5 Mar Emergency TUC meeting decides to plan day of national protest strikes and demonstrations against government's pay and prices policy.
6 Mar Budget: Confirmation of introduction of VAT at a standard rate of 10% from 1 April. Wider share ownership to be encouraged by scheme enabling companies to offer employees shares through SAYE. Unified income tax system introduced (see 30 March 1971 and 21 March 1972).
1 Apr VAT replaces other excise duties and Selective Employment Tax.
1 May 1.6 million strikers disrupt wide areas of industry, as part of protest against the introduction of Stage Two (see 17 January 1973). Increases in prices to be based on allowable costs and profit margins.
3 May £38.4 million public flotation of Rolls-Royce Motors announced.
5 Jun Price of gold closes at new peak of $126 per ounce in London markets.
28 Jun Nine EEC countries decide to try and catch up on timetable for economic and monetary union, in spite of doubts whether the Community will be ready to move ahead to the next stage at the end of 1973.
11 Sep Bank of England asks banks to restrict personal credit, and to limit interest paid on deposits of less than £10,000 to 9.5%.
9 Oct Public expenditure to be cut by a further £115 million in 1973/74.
16 Oct 66% rise in price of Arabian light crude oil by Gulf countries to almost $5 per barrel. Oil prices are being pushed up by supply shortages affected by turmoil in Middle East.
5 Nov Arab oil producing nations take measures to ensure minimum 25% cut in supplies to the West.
7 Nov Stage Three of the government's Price and Pay Code introduced. Wage increases to be limited to £2.25 per week or 7% whichever is the greater (subject to a maximum of £350 per annum). Threshold agreements allowable for 12-month period. Controls to be maintained on prices.
12 Nov Nationwide voltage reductions begin due to power engineers' industrial action.
13 Nov Government announces record monthly visible trade deficit of £298 million for October. The Bank of England calls for further special deposits and raises the minimum lending rate to 13% from 11.25%.
29 Nov Petrol ration coupons issued.
13 Dec Prime Minister announces new measures to curb use of power, including 3-day week from the New Year
17 Dec Mini-Budget: Hire purchase controls reintroduced. Supplementary Special Deposits Scheme - the corset - introduced, by which banks and finance houses required to place special deposits with Bank of England if their growth in interest bearing liabilities exceeds specified limits. Public expenditure to be reduced by £1.2 billion (1973 Survey prices) in 1974/75.
23 Dec Gulf oil producers announce an increase in the price for Saudi Arabian light crude oil from just over $5 per barrel to just over $11.5 per barrel from 1 January 1974.
31 Jan Bank of England announces the release of 0.5% of bank and finance house special deposits to ease the liquidity position of the banking system in order to avoid a sharp rise in overdraft rates.
5 Feb National Union of Mineworkers (NUM) announces full-scale strike to start from 10 February 1974.
11 Feb Petrol price rises 8p per gallon to 50p-52p.
28 Feb General Election: result indecisive; no overall majority; Labour wins 301 seats, Conservatives 297 and Liberals 14.
4 Mar Edward Heath resigns as Prime Minister and Harold Wilson, leader of the Labour Party, is invited by the Queen to form a government.
6 Mar Full working to be resumed in coal mines from 11 March after NUM accepts pay rises in the region of 35% from the Coal Board.
7 Mar Government announces return to 5-day working from 9 March.
26 Mar Chancellor Denis Healey presents the Budget: net increase in public expenditure of £700 million planned for 1974/75, but £1,400 million increase in taxation; basic rate of income tax raised to 33% from 30% and higher rate increased to 83% from 75%; rate of corporation tax increased to 52% (42% for small companies) from 40%; standard rate of VAT to remain at 10%, but base increased; tightening of exchange controls for financing direct and portfolio investment.
4 Apr Bank of England announces 1% release of special deposits to the banking system to ease pressure on UK interest rates.
19 Apr £500 million government loan to the building societies to prevent an increase in mortgage rates.
30 Apr Government publishes the Trade Union and Labour Relations Bill to repeal the Industrial Relations Act.
2 May Government announces lifting of restrictions on supply of petrol and aviation fuel.
12 Jun TUC leaders back policy of voluntary wage restraint to follow lifting of statutory wage controls at the end of July as contribution to 'Social Contract'.
9 Jul Prices Act 1974 receives Royal Assent, extending the government's prices policy by providing the Secretary of State for Prices and Consumer Protection with the power to subsidise certain foods.
22 Jul The Chancellor presents a mini-Budget designed to attack inflation and assist industry and employment in development areas. Dividend controls to be eased to help industry raise funds for new investment. VAT reduced to 8% from 10%, effective from 29 July.
15 Aug The Secretary of State for Industry sets out government plans for more state ownership and new system of planning agreements with companies in key sectors of industry in a White Paper - The Regeneration of British Industry.
10 Oct General Election: the Labour Party achieves an overall Commons' majority of 3.
12 Nov Supplementary Budget: measures aim to improve profitability and liquidity of the company sector and divert resources from consumption to investment and exports; price controls to be eased from December allowing companies to pass on 80% of increase in labour costs and 17.5% of the cost of fixed capital formation; Bank of England to recommend that all banks give priority to lending to industry; comprehensive programme of measures to conserve energy, including phasing out of subsidies to nationalised industries; a new tax to be introduced - the Petroleum Revenue Tax - on oil profits from Continental Shelf.
6 Dec Government announces intention to take equity stake in British Leyland in return for providing financial assistance.
13 Dec OPEC decides to raise average oil price to around $10.46 per barrel, and operate new unitary price from the beginning of January to the end of September 1975.
10 Feb Margaret Thatcher succeeds Edward Heath as Conservative Party leader.
28 Feb Bank of England drops Supplementary Special Deposit Scheme introduced on 17 December 1973 and puts a limit of 9.5% on rate paid by banks on their small deposits at branches.
2 Apr 30% pay rise awarded to miners.
15 Apr Chancellor presents deflationary Budget. Basic rate of income tax raised by 2 percentage points to 35%. 25% rate of VAT, previously applicable only to petrol, extended to cover a wide-range of 'luxury' goods. Subsidies to nationalised industries reduced to £70 million in 1975/76 from £550 million in 1974/75 and phased out by April 1976.
4 Jun Suez Canal reopens eight years after closure.
5 Jun Continued UK membership of the EEC endorsed in a referendum (by a majority of 67.2% to 32.8%).
10 Jun UK's first oil from North Sea starts to flow.
11 Jul Publication of government White Paper - The Attack on Inflation - introducing a universal pay rise limit of £6 per week (freeze on incomes over £8,500) from 1 August. Announcement that cash limits will be used as a means of curbing public expenditure at central and local levels in 1976/77.
1 Aug £6 a week pay rise limit becomes effective.
19 Sep Government launches £175 million scheme to create jobs. It includes an extension of employment subsidies and finance for industrial investment.
28 Sep OPEC agrees to 10% increase in oil price from 1 October to hold until June 1976.
3 Oct Bank of England announces a 1 percentage point increase to 12% in its minimum lending rate following downward pressure on the pound during the summer.
12 Nov Royal Assent received for Industry Bill, which introduces planning agreements and establishes National Enterprise Board to set up industrial enterprises, assist existing ones and extend public ownership into profitable manufacturing industry.
20 Nov Government confirms that cash limits will be applied to most public expenditure in the financial year 1976/77, including rate support grant provided to local authorities.
11 Dec Chrysler Corporation accepts government offer of state aid.
22 Dec British Leyland announces record loss of £123 million in 1975.
19 Feb Public expenditure White Paper published, showing reductions in spending of £1.0 billion in 1977/78 and £2.4 billion in 1978/79 compared with previous plans.
16 Mar Harold Wilson announces his resignation as Prime Minister.
5 Apr James Callaghan takes over as Prime Minister and leader of the Labour Party.
6 Apr £1.3 billion tax cuts announced in the Budget, but most made dependent on agreement by the TUC to a new low pay norm of around 3% in Phase Two. Other Budget measures include: VAT on 'luxury' goods reduced from 25% to 12.5%; statement that the money supply should not be allowed to fuel inflation, although no explicit monetary target announced.
1 Jun Most provisions of Employment Protection Act come into force.
16 Jun Special TUC meeting endorses a modified annual 4.5% (from August) pay formula (see 6 April 1976).
30 Jun White Paper published The Attack on Inflation: The Second Year. It proposes limits on wage and salary increases of £2.50 for those earning up to £50 per week, of 5% for those earning between £50 and £80 and of £4 per week for all higher levels of earnings. Also includes proposals for modifications to the Price Code.
21 Jul Government approves £30 million as first tranche of £100 million investment funds to British Leyland.
22 Jul Following heavy selling of sterling in the spring the Chancellor announces a further £1.0 billion reduction in public expenditure for 1977/78 and adopts a target for the growth of the money supply, on the M3 measure (including bank deposits), of 12% for 1976/77.
29 Sep The Treasury announces it is to seek a record $3.9 billion medium-term loan from the IMF
7 Oct Bank of England raises its minimum lending rate to 15% from 13%.
8 Oct Barclays Bank raises its base rate to 14% from 12%.
8 Nov The Chancellor states willingness of EEC finance ministers to help UK with aid beyond the IMF's $3.9 billion.
18 Nov Re-introduction of the Supplementary Special Deposit Scheme.
15 Dec Mini-Budget: cuts in expenditure plans, amounting to £1.0 billion in 1977/78 and £1.5 billion in 1978/79 (at 1976 Survey prices); increases in duties on alcohol and tobacco (from 1 January 1977); sale of part of government stake in BP to raise £0.5 billion; aim is to achieve targets for the PSBR of £8.7 billion in 1977/78 and £8.6 billion in 1978/79; DCE to be kept to £9.0 billion in 1976/77, £7.7 billion in 1977/78 and £6.0 billion in 1978/79. Letter of Intent to the IMF associated with the application for a $3.9 billion loan (see 29 September 1976).
10 Jan Bank for International Settlements, backed by Belgium, Canada, West Germany, Japan, the Netherlands, Sweden, Switzerland and the US, announces the availability of medium-term credit facility of $3 billion to Bank of England as security against withdrawal of foreign official sterling balances, designed to reduce sterling's reserve role and provide a safety net to increase confidence in the UK currency.
23 Mar Liberals support Labour in no confidence motion, providing the first fruits of the 'Lib-Lab pact'.
29 Mar Budget: Measures include: reductions in income tax, including a fall in the basic rate to 33% from 35%, totalling £2.25 billion in full year, almost £1 billion of which are contingent on negotiation of new pay policy; stronger powers to be sought to control sterling borrowing by foreign-owned UK companies. Growth of £M3 estimated at 9%-13%.
1 Jul Abolition of most industrial tariffs between EEC and six members of EFTA creates virtual free trade market of 300 million west Europeans.
15 Jul Mini-Budget: Basic rate of income tax reduced by 1 percentage point to 34% instead of conditional 2 percentage points announced in the Budget (see 29 March 1977); dividend controls extended for a further year with present 10% limit.
21 Jul Government accepts the principle of indexation in tax system (the Rooker-Wise Amendment). Personal tax allowances will now increase each year from 1978/79 in line with retail price inflation.
22 Jul Price Commission Act 1977 receives Royal Assent. It describes the duty of the Price Commission to be to restrain the prices of goods and services 'so far as to be consistent with the making of adequate profits by efficient suppliers'.
25 Jul Government provides a further £100 million for Leyland, but company must satisfy National Enterprise Board of progress in improving industrial relations.
31 Jul Phase Two of government's pay policy ends.
11 Aug Bank of England suspends Supplementary Special Deposits Scheme (corset) controls on growth of banking system's resources.
7 Sep TUC votes in favour of unions' commitment not to reopen incomes policy settlements before they have run full twelve months. The government continues to seek voluntary 10% limit on earnings increases in Phase Three (and allowing for special cases on the basis of restoring differentials or self-financing productivity deals).
17 Oct The Bank of England lowers its minimum lending rate to 5% from 5.5%. The rate has fallen from a peak of 15% on 7 October 1976.
17 Oct Barclays base rate, which has been falling over the past year, is lowered to 6% from 7%.
26 Oct Mini-Budget: Increases in income tax allowances and public expenditure increase of £1 billion in 1978/79 announced at a cost of £1 billion in 1977/78 and £2.25 billion in 1978/79. Nevertheless, the PSBR for 1977/78 is estimated at £7.5 billion, £1 billion below the 1977 Budget estimate. Restrictions relaxed on borrowings by non-resident controlled companies to finance expenditure in the UK. Introduction of pensioners' £10 Christmas bonus.
28 Nov Bank of England raises its minimum lending rate to 7% from 5%.
11 Apr Budget: introduction of a lower rate of income tax of 25% on first £750 of taxable income; minimum lending rate raised by 1 percentage point to 7.5%, effective from tomorrow; rolling six monthly targets for £M3 adopted, the growth range for 1978/79 set at 8%-12%; arrangements to be made to prepay a further $1 billion to the IMF this year in addition to the $1 billion prepayment announced on 26 January 1978.
8 May Opposition forces 1% reduction in standard rate of income tax in amendment to Finance Bill.
21 Jul Publication of White Paper Winning the Battle Against Inflation. The main proposals include: 5% for pay settlements, excluding productivity; to help low paid, increases above 5% allowed to reach earnings of £44.50 a week; dividends - extension of statutory control, with some relaxation, to 31 July 1979.
9 Nov Government announces that the target for £M3 growth for the year to October 1979 will be 8%-12%. Minimum lending rate raised by 2.5 percentage points to 12.5%.
28 Nov Government announces decision to blacklist Ford UK as part of its discriminatory sanctions against private companies which breach 5% pay guidelines.
17 Dec OPEC announces a rise in the price of benchmark crude oil of 14.5% in four phases during 1979, beginning on 1 January with 5%.
20 Dec Ford gives formal undertaking to Price Commission that it will not pass on in price increases more than 5% of recent 17% pay award.
16 Jan 'Winter of discontent' - government's wages policy relaxed in bid to avert series of crippling strikes in public services. Three-point package to mean more cash for low-paid, comparability with private industry for many public sector workers and tougher price controls for manufacturers.
22 Jan One day protest strike against government pay policy by public-service workers causes disruption to local authority and health services.
12 Mar European Monetary System (EMS) initiated without UK participation.
3 May General Election: Conservative Party, led by Margaret Thatcher, succeeds the Labour government with overall Commons' majority of 43.
15 May Price Commission abolished.
12 Jun Chancellor Geoffrey Howe presents his first Budget: measures aim to switch to indirect from direct taxation; increase in VAT, effective from 18 June, to a unified 15% from current rates of 8% and 12.5%; basic rate of income tax reduced to 30% from 33% and top tax rate lowered to 60% from 83%; dividend control to end when existing legislation expires on 31 July; Petroleum Revenue Tax increase from 45% to 60% confirmed; total public expenditure reductions of almost £1.5 billion in the current financial year; target range for £M3 reduced to 7%-11% for ten months to April 1980; minimum lending rate raised by 2 percentage points to 14% effective from 13 June.
28 Jun OPEC increases oil prices by 15% over present levels. The price of petrol in the UK will rise by 10p a gallon.
5 Jul UK removes exchange restrictions on non-banks' use of sterling to finance third country trade.
24 Oct Exchange control restrictions removed. Sterling and foreign currency can be used for any purpose.
1 Nov White Paper - Government's Expenditure Plans 1980/81 - published, specifying £3.5 billion cut in previous expenditure plans for 1980/81. Proposals announced for the sale of government assets worth £1.5 billion.
1 Nov British Steel Corporation formally announces closure of iron and steelmaking at Corby, Northamptonshire, with loss of 5,500 jobs.
15 Nov Bank of England raises its minimum lending rate by 3 percentage points to 17%.
30 Nov The Prime Minister asks EEC for £1 billion rebate.
13 Dec Saudi Arabia raises the price of Arabian light crude oil to $24 per barrel from $18.