Abstract
This contribution re-examines the Medium Term Financial Strategy which the first Conservative government (1979-1983) adopted as a framework for implementing its monetary and fiscal policies. Conceptually monetarist, the MTFS progressively gave way to more traditional considerations of controlling public spending, though the 1981 Budget sought to combine monetarist zeal and a tight grip on finances in the middle of a major recession. Accordingly, the MTFS and this Budget definitively marked the final break with post-war Keynesian demand management. The MTFS was controversial at the time and its legacy is still disputed. The contribution reviews the MTFS in the light of the release of Cabinet papers and other recent accounts of witnesses who shaped policy. It also looks at what the impact of the MTFS was on monetary policy in the following years, and how even today the memory of the 1981 Budget is still shaping Coalition and Conservative government policy.
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