THE GENERAL ELECTION of May 1979 in the United Kingdom ushered into power a Conservative administration whose monetary and budgetary policies differed quite markedly from those of its predecessors, both in objectives and in the means for achieving them. The macroeconomic objectives of the present government have been stated clearly. In a letter to the House of Commons Treasury and Civil Service Committee in February 1980, the Chancellor of the Exchequer wrote: “The main objectives of the Government’s economic strategy are to reduce inflation and to create conditions in which sustainable economic growth can be achieved.” It was also emphasized that, in contrast to previous Labour and Conservative administrations, the use of incomes policy was not viewed as the appropriate way to check inflation.
