October 31, 2025
Happy 100th, Maggie!
Reflecting on the multifaceted legacy of the Iron Lady.
To the point!
The Iron Lady’s 100th birthday is a fitting moment to reflect on the reasons – and consequences – of abandoning the political center.
There is arguably no political figure who fundamentally reshaped her country as much as Margaret Thatcher did during her tenure as British Prime Minister from 1979 until her forced resignation in 1990. Few leaders have been more polarizing – though a certain U.S. President has lately surpassed all competition in the "controversy" category. This month marks what would have been the Iron Lady's 100th birthday. Her impact endures.
A country in decline
In the 1970s, Britain was a nation in steep decline: inflation, unemployment, frequent strikes, blackouts, and the humiliation of seeking a bailout from the International Monetary Fund. Both major political parties – the conservative Tories and Labour – broadly supported the post-war consensus. This approach aimed for full employment and included significant union involve-ment in economic policy decision-making. Strategic industries were kept under state control, no matter how unprofitable they became. If full employment was threatened, the government wouldn’t hesitate to pump in money.
The 1970s: Not-So-Great Britain
After the 1973 oil price shock, inflation spiraled out of control. The conservative government under Prime Minister Edward Heath attempted wage controls to combat the crisis. The unions responded with strikes. Heath backed down. The internal Tory rebellion this triggered vaulted Thatcher to party leadership in 1975 – and after the tumultuous “winter of discontent” to Downing Street in 1979. She was the first woman to hold the highest government office in the land. Socially, she was also an outsider within her own party of elites: Thatcher was the daughter of a provincial greengrocer from northern England. No Eton pedigree here – just an iron will.
The Thatcher revolution
The Iron Lady fiercely tackled all pressing issues. To combat inflation, she raised interest rates. Yes, you read that correctly: the Bank of England only gained independence in 1997 under Tony Blair. Thatcher accelerated privatizations and slashed public spending, particularly on social programs. Unlike her Tory colleague Edward Heath in 1974, Thatcher refused to give in to striking coal miners. The unions had no choice but to capitulate. Inflation was defeated (see Fig. 1), yet unemployment soared to 13%. Still, what saved Thatcher politically was Argentina: In 1982, it invaded the Falkland Islands, triggering a patriotic surge as Britain fought to retake them. This wave of national pride carried Thatcher to re-election in 1983. I remember it well – Union Jacks were everywhere. At the time, I was an exchange student in Wolverhampton, a struggling industrial town in the Midlands.
Fig. 1: Annual inflation in the United Kingdom
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The dark side of the legacy
Thatcher undeniably revitalized Britain's economy. But she also fundamentally altered the nature of Anglo-American conservatism. Before her, the Tories stood for tradition and stable institutions. With revolutionary zeal, Thatcher reframed the debate: “There is no such thing as society, only individuals.” The old Tory virtues of balance, measured reform, and gradual progress were sacrificed on the altar of radical disruption. As revolutions often devour their own, Thatcher, too, was ousted by her own party in 1990. Her uncompromising approach had simply become too much for her party.
Yet, the seeds of division she planted continued to grow. The traditional Tories found themselves unable to resist the pull of radical disruptors. Over time, the party was captured by hardline Brexiteers, even though the Conservatives had historically been pro-European. Indeed, it was Heath who led Britain into the European Economic Community. But after leaving office, Thatcher became a vocal supporter of growing Euroscepticism from the sidelines, spurring her successors to accuse pro-European Conservatives of sabotage. Absolutism replaced compromise.
Fig. 2: Voting intention in the United Kingdom
September 2025
Without Thatcher, Brexit would probably not have happened. Yet it brought no favors to her party – and even less to the British economy. Following lackluster prime ministers, the Tories suffered a landslide defeat to Labour. To make matters worse, Nigel Farage's hard-right Reform UK party, born out of the Brexit movement, is now siphoning off Tory votes (see Fig. 2). In the short term, Thatcher saved the British economy. In the long term, she deepened the social divides in British society. Then again, she never believed in the concept of “society” in the first place.
In many ways, we’re seeing parallel dynamics unfold in the United States, where Ronald Reagan played the Thatcher role. The Iron Lady’s 100th birthday is a fitting moment to reflect on the reasons – and consequences – of abandoning the political center. Surely a topic worth considering in other countries, too.
Dr. Moritz Kraemer, Chief Economist / Head of Research at LBBW
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