LONDON – It went beyond the Big Bang.
Margaret Thatcher transformed the British economy over little more than a decade in office. She introduced free-market policies that helped the country throw off its postwar malaise and shook up the cozy world of banks and brokers with a flurry of deregulation — which came to be known as the “Big Bang” — that made London one of the world’s pre-eminent financial centres.
But while Thatcher ushered in an era of unprecedented economic growth, her legacy on economic issues remains divisive. Some argue her policies also sowed the seeds for the 2008 financial crisis. Meanwhile, the economy is on the verge of another recession and she is still reviled by unions who say she ignored the needs of workers and the poor.
“To supporters, she changed Britain from a nation in long term industrial decline to an energetic, dynamic economy. To opponents, she entrenched inequalities between the regions and classes, and placed the free market above all other concerns,” Richard Carr, a political historian at Anglia Ruskin University said in statement. “Our politics, and many of our politicians, have been forged in her legacy.”
When Thatcher arrived at 10 Downing Street in May 1979, Britain’s first female prime minister set about smashing the existing economic order. Along with her conservative soulmate, President Ronald Reagan, she rejected the way economic policy had been conducted since the end of World War II in favour of a focus on free market ideology that is accepted by most of the world today.
The woman who said she learned to be careful with money by watching her green-grocer father sought to reduce the government’s footprint in the economy, diminished labour unions’ powers and overhauled London’s financial centre.
In 1986, just a year before the movie “Wall Street” coined the phrase “greed is good,” Thatcher pushed through a flurry of reforms, the so-called Big Bang, which broke up the “boys’ club” culture that dominated the City of London. The changes allowed international banks like Goldman Sachs to step in and attracted a river of foreign business.
It changed the financial services sector and the country.
“The Big Bang paved the way for the spectacular growth of the financial services industry in the U.K.,” said Iain Begg, a professor from the London School of Economcis. “It went from a relatively cozy banking centre doing business with the rest of the world to a major league player earning money from the rest of the world.”
Those free market policies were embraced by subsequent governments, even by the left-wing Labour Party administrations under Tony Blair and Gordon Brown.
Critics, however, say they were taken too far. For all the wealth the banks created, they were also piling on far too many risky investments. When the U.S. subprime mortgage market began freezing up in 2007 and a global credit crunch began in 2008, the British banks were caught unprepared.
Royal Bank of Scotland, Lloyds, and Northern Rock were the biggest of a series of financial groups to need billions in taxpayer money to avoid collapse. Bankers and their huge bonuses became the subject of popular anger. Wary that free market ideology may have gone too far, the British government is trying to pull back some of the banks’ freedoms and impose tougher regulation.
Thatcher’s influence on other parts of the economy has proved just as enduring.
She took a hard line during strikes in 1984 and 1985, facing down coal miners with riot police and crushing the power of the nation’s once powerful unions. The left demonized her as an implacably hostile union buster, with stone-cold indifference to the poor and a legacy that remains the working classes of the country to this day.
Nick Cosgrave, a 66-year-old retired bricklayer, said Thatcher will long be reviled by blue collar Britons.
“She did a lot of bad to the working class,” he said. “She didn’t do anything to help the workers help themselves.”
Her commitment to free markets led her to sell off a raft of state-owned industries — from British Gas to British Airways — and to cut taxes. Britain’s economy started growing again and unemployment started falling. But society was riven with huge divides, many of the state resources that ordinary people relied upon were starved of cash. By the time she left office in November, 1990, Britain was a very different place from when she first took office.
On one issue many Britons would still agree with Thatcher: Her stubborn rejection of the notion of the euro, Europe’s common currency, when it was first being considered in the 1980s.
The euro has for the past three years been in crisis as its members struggle with excessive debt and no longer have a national currency to devalue to regain competitiveness for their exports. Thatcher famously rejected any notion that Britain might give up the pound and was a tough negotiator with European leaders in Brussels.
EU Commission President Jose Manuel Barroso, offered sadness at her passing, but even he had to note her wilful point of view.
“She will be remembered for both her contributions to and her reserves about our common project,” he said.
Associated Press Writers Pan Pylas and Raphael Satter contributed to this story.