THE EDUCATION OF THE TREASURY: THE MEDIUMTERM FINANCIAL STRATEGY 1980–84

The first Thatcher government introduced an innovatory macro-economic plan – the medium-term financial strategy (MTFs) – in March 1980. It was the most notable example of how the Government sought to change the direction of post-war policy. This article traces the origins and formulation of the strategy, noting that it was Treasury-imposed, and monetarist in orientation. During its implementation however it was substantially modified. The phrase 'pragmatism and continuity' best describes this process. Aspects of macro-economic policy are introduced to develop this theme. There is clear evidence that the Treasury was 'educated' by the problems encountered: the objectives of the MTFS were not uniquely achievable simply because they were deliberately limited in scope. Nevertheless, the strategy has survived as a policy framework and freed from its monetarist dogma remains a useful means of co-ordinating objectives.