Coffee House

Margaret Thatcher in six graphs

10 April 2013

12:58 PM

10 April 2013

12:58 PM

With the debate swirling about Margaret Thatcher’s legacy and her government’s record, it’s worth taking a look at what the cold, hard economic data has to say about her time in office. Of course, growth rates and unemployment figures can’t tell us everything about a period, but they can at least provide a bit of substance to mix with the well-worn rhetoric.

1. Average growth. Under Thatcher, GDP rose by 29.4 per cent — an average of 0.6 per cent growth per quarter. (That’s the same as the average growth rate from 1955 to 2013.)

Thatcher growth


2. Manufacturing jobs lost, but more service jobs created. A net of 1.6 million jobs were created under Thatcher. The manufacturing industry lost 1.9 million, while the services sector grew by 3.6 million.

Thatcher jobs



3. Unemployment up, then down, then up again. The unemployment rate rose from 5.3 per cent to a high of 12 per cent in 1984, before falling to 7.5 per cent when Thatcher left office. It began to rise again in 1990, and continued to do so after she left, reaching a high of 10.8 per cent in January 1993.

Thatcher unemployment


4. Inequality rose dramatically… The Gini coefficient went from 0.25 in 1979 to 0.34 in 1990.

Thatcher Gini


5. …but were the poor better off? Thatcher said she didn’t care about the gap between rich and poor, but rather that everyone became better off in absolute terms. So did the poor get richer over the Thatcher years? As the below graph shows, they did (slightly) before you take into account rising housing costs. The income of the 10th percentile rose by 4.6 per cent in real terms before housing costs (the income of the 90th percentile rose by 47 per cent). But after housing costs, the real income of the 10th percentile fell by 2.4 per cent — so the poor were in fact worse off in 1990 than in 1979 (the 90th percentile were 48 per cent better off after housing costs).

Thatcher income


6. Shrinking the state? Government spending actually rose by 17.6 per cent in real terms under Thatcher, but because that was slower than overall growth it came to represent a smaller share of the economy. Spending was 45.1 per cent of GDP when Thatcher took office and 39.4 per cent when she left.

Thatcher TME


UPDATE: And, as a seventh graph, here’s inflation under Thatcher. On the Retail Prices Index, it peaked at 21.9 per cent after her first year in office, and fell to a low of 2.4 per cent in the summer of ’86. But then it began to rise again, to a peak of 10.9 per cent in Autumn 1990. So inflation was 10.3 per cent when Thatcher took office and 9.7 per cent when she left it. But the difference was that 10 per cent and rising in 1979, but 10 per cent and falling in 1990.

Thatcher inflation

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Show comments
  • Jamie

    I’d have liked to have seen this graph showing the quadrupling of those on incapacity benefit bring total out-of-work and on benefits from 2 million to 6 million under Thatcher – the creator of welfare dependency.

  • Martin Stepek

    Excellent graphs thanks but really we need the same themes as in these graphs but with comparable economies shown eg: USA, Japan, Germany, France, Australia, Italy because what these figures show are really only how the Thatcher era compared with other Prime Ministers’ eras; the real evidence is in how Britain did under her reign compared to how other countries did. If GDP grew by 10% in the rich world generally over say five years, and the UK did the same then the government can’t take any credit – it was just the flow of the global economy. So until we get to see these figures it is difficult to really assess Mrs T’s reign.

  • Fat Bloke on Tour


    Where is Graph No.7?
    You know the one that shows the numbers claiming disability benefit.
    If you are stuck you could always ask Sniffy – he knows the numbers.
    Remember he made a speech about it.

  • Jupiter

    The last graph shows the stupidity of Gordon Brown. If he had kept government spending increases to the same rate as the previous 30 years, spending would be just over £500billion instead of the £700billion it is now. And what makes it even more stupid is that we have nothing to show for it, except humungous debts.

  • AnotherDaveB

    Re:graph 1
    The growth rate before 1979, was clearly lower than the growth rate after 1979, and the Conservative/Thatcher reforms.

  • Hookeslaw

    The first rise in unemployment and inflation were let rip by the outgoing labour govt and is in contrast to the benign conditions inherited by labour in 1997.

    Mrs Thatcher led a Conservative govt and it was conservative thinking that she slowly but surely implemented.

    In terms of reforms it was often liberal conservatives who led them, Ken Clarke comes to mind, and it was a liberal conservative minister of defence in the period of Greenham Common.

    • AnotherDaveB

      In one book I read (possibly John Hoskyn’s “Just in Time”) an anonymous Thatcher era cabinet minister is quoted describing the Thatcher administration as ’19th century liberals’.

    • Tom Tom

      Edward Heath left a State of Emergency, 3-Day Week, and rising Inflation so cut the crap. In case you had not noticed the French inserted Khomeini into Iran in 1978 and that caused a bit of a spike in OIL PRICES which tends to induce INFLATION

  • David Lindsay

    Blair will presumably get her Garter, so to speak. Sickening, but there we are. However, the vacancy in the Order of Merit ought to be filled by someone from the Hillsborough Justice Campaign. Ed Miliband, as soon as the sun has set on the day of her funeral, get on the case. Or get out of the way, for someone who will do these things.

    • Tom Tom

      Order of Merit should go to a leading Scientist

  • M. Wenzl

    Thanks to JJ for cutting through the spin of both the left and right.

  • anyfool

    Anyone who was brought up after the war will realise the Eighties was the period when things actually became a whole lot better, these graphs are as meaningless as the current growth figures.
    It is only in the last 12 years when wages have stood still or dropped and that started before the collapse of the economy in 2008.

    • Tom Tom

      Yes Oil did wonders for Libya and Saudi Arabia and Natural Gas worked wonders for The Netherlands, but the “Dutch Disease” is what afflicts Britain now that N Sea Oil and gas is no longer covering up basic national failure as in the 1980s

      • David Lindsay

        Speaking of oil, Cameron has opined that people in Kuwait “owe their freedom” to Margaret Thatcher. Thank you for that pearl of wisdom, Prime Minister.

        • Hookeslaw

          There was no basic national failure in the 80’s. The desire for trade union hegemony was defeated nationalised industries were sold off. The failures of the late 60’s and 70’s were put right.
          New companies were attracted which replaced our decrepit home grown car industries and where see see car jobs being added in the UK the French auto industry which the state subsidised in the 80s are losing 13000 jobs.

          • David Lindsay

            I do not see how that is a reply to my comment. Was it intended for something else? Mine at the bottom of this page was. It happens.

            • Hookeslaw

              You are right – I think the clue is in tomtoms mention of national failure in the 80s

              • Tom Tom

                Yes. It was national failure saved only by the Saudi Arabian policy of increasing oil supply and giving a fillip to world trade and easy money setting off a credit boom. So tell us Hookes Law how big the Trade Surplus was in 1986,1987, 1988, 1989, 1990, 1991, 1992

          • Tom Tom

            You obsess about the car industry but seem oblivious to its nature. Let us think of Rowntree, Dunlop, ICI, IMI, Racal, GEC, Vickers, ConsGold, Hawker Siddeley, Metal Box, Amersham Intl., Cable & Wireless, Crompton Parkinson, Plessey, Pilkingtons, Allied Lyons, Cellnet, Ferranti,

            • Fat Bloke on Tour


              You are having a laugh regarding the car industry.

              JLR is doing well because they are on their own, all the work done in the past by Ford and BMW has come good and Tata have bet the farm on a new high volume platform.

              Nissan is on a role because it was reinvigorated by a Frenchman.

              Mini was bankrolled by BMW and has made good progress although it is now starting to stagnate as it flogs a dead horse and adds volume in Austria and Holland.

              Toyota is just marking time.

              Honda is still looking for the guy that signed off the Civic’s styling.

              Ford is dying on its feet – Fiesta no more quickly followed by Transit no more.

          • UKSteve
          • Fat Bloke on Tour

            Hooky Part 2

            GM / Vauxhall is just keeping up appearances.
            We buy more than the Germans so EP has to stay open.
            Luton vans is losing the race with Renault / France to be lead small van plant.

            Lotus is now a dry husk.

            AM is now trying to come to terms with a new owner, looking good but still huge gamble.

            Bentley – Crewe is in competition with Central Europe for the new aristocratic RR, what will you say if it loses”

            RR is a cottage industry, a BMW GIRFUY to VW to remind them that no matter how hard they tried the boys from Bavaria won the competition.

      • anyfool

        Rubbish, the advent of oil only made the passing of dead industries less injurious to the nations health.
        Shipyards, coal and steel could not be kept open when every year as they pumped more and more money in, unions were destroying any chance of them standing still let alone contributing to the economy.
        The blame for the parlous state of this country is not Thatcher or Oil, it is the lazy and stupid people of whom we are well endowed.

    • spirit_of_58

      ‘…these graphs are meaningless…” Don’t your think that’s a bit arrogant?

  • Count Dooku

    Nice way to spin the income figures by including “housing” for the 10th percentile but not the 90th. You should have simply used RPI and RPIX.

    Also for income growth, the same people in the 10th at the start of her leadership won’t be the same people in the 10th at the end. Someone who started as a student and ended as a cleaner will remain in the 10th and you wouldn’t expect a large increase in their income. Someone who started as a student and ended as an engineer would have a much higher income and they are welcome to it. The percentile a aren’t static, people move between groups.

    Lying with stats as per usual.

    • Count Dooku
    • Hookeslaw

      As people grow older we could expect them to be richer. if we have a more youthful population that might be spun to say people are poorer.

      But how relatively poor are the people in the poorest part of the population at any one time?
      If in 1950 the poor lived in a decrepit terrace with an outside toilet and a tin bath in front of the fire and rats for company but in 2013 they live with income and rent support in a conventional semi with a bathroom garden and TV – are they better off?

      • Count Dooku

        Of course they are better off. Just about everyone was better off which Jonathan totally forgot to mention for some reason.

        The digital revolution kicked off in the 80s and though she didn’t create it Thatcher’s privatisations helped to spur it along. Can you imagine Britain today if all out phones, mobiles and Internet services were provided by a state monopoly?

        • Hookeslaw

          Yes I can…!
          But isn’t that the point that Thatcher was making. The rich may be drawing away in terms of wealth but if the poor are benefiting as well (as opposed to if there were restrictions on the rich) then it was for the best.

          When we think of the rich – like Gates for instance – simple advances in technology bestowed great riches far beyond the benefits to the rest of us. To me its what the rich do with their money that counts and if its used for good again the less well, off benefit. Working class rich like footballers and their wives have become synonymous with conspicuous pointless consumption.
          I think Brown’s legacy will be one of pointless consumption.

          • Count Dooku

            So you don’t think creating software that over 2 billion people use daily is enough to justify Bill Gate’s fortune? Each year the global economy is TRILLIONS of dollars more productive solely because of the work of Microsoft. Do you not think that his creations were a good use of his fortune and he should be amply rewarded for them?

            If he gave away his £80 Billion fortune today (half the NHS budget), it wouldn’t help humanity a hundredth of the amount his inventions and that of Microsoft have done already.

            • Fat Bloke on Tour


              You are obviously a project manager or you work in sales.
              Design excellence has died with the rise of the “Excel Engineer”.

              As for BG he has designed nothing, all he has done is put a wrapper on a bundle of knocked off / Thrifted copies of real software.

              As for the productivity gains, get a life or a real job.
              Death by PowerPoint more like or submerged below a sea of e-mail.

              Consequently wrong in just about everything, from the NHS budget to Snatch’s legacy. You are a great shot – one bullet, both feet and ricochet up your right nostril.

              • Count Dooku

                Good one. Very funny. Thanks for not addressing any if the points outlined.

                • Alex

                  From articles I have seen regarding Bill Gates he does intend to give a large if not the largest percentage of his current wealth to the Gates Foundation upon his death rather than passing it simply to his children. If actually done that alone will probably have a better effect on world society than handing it to any government as a tax.

  • Daniel Maris

    Yep – just confirms in many ways how unremarkable her reign was in terms increasing the nation’s wealth. But the graph for the Gini coefficient (a measure of inequal distribution of income – JJ didn’t explain) shows how ideological her government was.

    She provided a pyschological fillip I guess, in that a lot more people felt good about the UK. But recent events suggest that was rather hollow.

    And all things are relative. How were other countries doing in this period? Remember, also she was gifted huge amount of oil revenues. Remember also, she didn’t have to deal with the oil price shock as did Wilson and Callaghan (and looking back at those growth figures, it seems they dealt with it very well).

    Overall, her record was very poor I think, given all her advantages. She was a good war leader one can say but otherwise the economic prosperity of her era was like a phantom pregnancy.

    • the viceroy’s gin

      She was also smart enough to shirk the windmill nutters, and all the public money wasted, capital destroyed and energy costs skyrocketed… degrading living standards across the land.

      • Daniel Maris

        The embraced the nuclear nutters and was really taken in by the old super-subsidised state-owned centralist nuclear industry. Yes, ironic wasn’t it?

        • the viceroy’s gin

          …and fortunately for her, nuclear power is available always and is cheaper, unlike the windmill nutters’ wedreams. So, good choice.

    • FF42

      How were other countries doing in this period? About the same except for unemployment, which was worse in the UK at that time. The UK economy took off, relatively speaking, under John Major. Gordon Brown did quite well too until he blotted his copybook with the banking crisis. I am talking about economic metrics, not politics.

    • HJ777

      Oil/Gas revenues have never constituted more than 5% of GDP – and required a lot of investment to produce that revenue. Governments before and after her gained just as much from oil and gas revenues.

      • Tom Tom

        Well that is 5% GDP that was not IMPORTED so that has a major impact on the Balance of Payments which is 5% GDP. Oh and lest we forget, Deficits drive the Currency into the floor and N Sea Oil boosted Sterling so happy Consumers could buy the kind of consumer goodies that would otherwise have been out of reach. North Sea Oil let Britons consume like Germans and produce like Spaniards……it was the same story as EMU for Spain

    • Tom Tom

      “her reign” Elizabeth REIGNED Margaret RULED

      • Simon Semere

        her ‘reign’ is what margeret would have preferred.

      • iviv44

        Easy to remember; Maggie Rules, OK

    • 2trueblue

      Amazing observation when you consider that over the 13yrs of Liebore we were all poorer. Blair managed to suck the very aspiration that Thatcher put into our society. Unicef gave out some figures that display how far down the league we are, in 2007 we had sunk near the bottom and the recent figures released for 1020 show that we had made little progress. The BBC of course presented the figures trying to blame the present austerity, which of course up to 2010 do not include this governments period in power. Blair did not manage to build any real legacy, just vacuous spin. Educational standards dropped, teenage pregnancies skyrocketed, and our youth unemployment was at one of its highest levels.

      • Daniel Maris

        [MY other slip – this was meant in reply to Tom Tom’s observation below] My slip, but no doubt another tribute to the psychological force of her part in our nation’s narrative.

  • Fat Bloke on Tour


    What is the story?
    “Trevor” to ashamed to put his name to the article?

    You seem to have missed the 800lb Gorilla in the room — North Sea Oil.
    Consequently piece of glee club tripe.

    • the viceroy’s gin

      …and she might have also received revenues from coal production, along with all the jobs created, if you bolsheviks and fellow traveling envirowhackos hadn’t squelched that.

    • Colonel Mustard

      Tired of the left. Tired of the causes of the left.

    • Tom Tom


  • Tom Tom

    None of these graphs show relative positions with respect to Germany, especially with respect to growth.

    • Archimedes

      Indeed, and when you have a central bank that actively intervenes to normalise the growth rate to it’s underlying trend, it’s all a bit meaningless. The statisticians finally succeeded in cancelling themselves out.

    • Kit Ingoldby

      The graph showing relative economic performance relative to France is very instructive. Up to 1979, Britain was becoming progressively poorer than France, from then on Britain was catching up and eventually became richer once again.

      People can play with statistics all they want, the facts are that Margaret Thatcher saved the British economy from complete collapse.