Book of the week: A look back at Britain's currency crisis

Book review: When Britain Went BustThis is an extremely readable account of a moment when domestic politics and global finance collided.

Dr Matthew Partridge
By
published
in Features

829-When-Britain-went-bust-100

Published by OMFIF Press (£15)

Buy at Amazon

Nothing epitomised the breakdown of the post-war economic order more than Britain's 1976 currency crisis, but there have been few detailed studies of the events that culminated in Britain requiring a loan from the International Monetary Fund. OMFIF, a think tank, has attempted to fill the gap with When Britain Went Bust: The 1976 IMF Crisis, a monograph by Richard Roberts, a financial historian at King's College London, that analyses what happened during those momentous months.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The crisis had its roots in structural problems, including chronic deficits, poor labour relations and unproductive industry. However, it started when government budget plans were defeated in March 1976. Within a few months the value of sterling had plunged by a quarter. As money flowed out of the country, international lenders demanded large cuts to state spending in exchange for the loans that were seen as necessary in order to stop further falls. In contrast, a rebel cabinet faction called for import controls and mass nationalisation of Britain's leading companies instead. Ironically, as Roberts points out, all sides underestimated the amount of money that Britain would subsequently get from oil revenues.

Roberts draws on many sources, including cabinet papers, press reports and biographies, but also takes advantage of recent literature on currency crises. The result is an extremely readable account of a moment when domestic politics and global finance collided. While it is aimed at financial economists, it will also appeal to those who enjoy reading about British political history.

Dr Matthew Partridge
Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri

Latest