The economic consequences of a hung parliament : lessons from February 1974

Abstract

The British general election on 10 May 2010 delivered Britain’s first hung Parliament since February 1974, and in the run-up, the Conservative Party made much of the economic difficulties Britain faced in the second half of the 1970s in order to try and convince voters that anything other than a Tory vote would risk exposing the nation to the discipline of financial markets. The question of how well equipped an exceptional kind of British government is to deal with exceptional economic circumstances is therefore of paramount importance. This paper argues that the Conservative Party made too much of the impact of the 1974 hung Parliament in precipitating subsequent economic crisis and suggests that as such, there is no reason to assume that the Conservative-Liberal coalition government is ill-equipped to manage British economic affairs in difficult circumstances