2. France and Britain in the 1980s: two economic models and two societies in evolution
Key issues
- Was there a ‘Thatcher Revolution’, 1979-1990?
- ‘A radical and successful break with the past.’ Assess the validity of this view of Thatcherism.
- ‘A socialist in name only.’ With reference to the 1981-88 period, how far do you agree with this view of François Mitterrand?
- With reference to his first term of office (1981-1988), assess the impact of Mitterrand’s presidency on France.
Key terms
- Thatcherism
- Privatisation (Britain)
- Cohabitation (France)
- Austerity (France)
Discussion points
- Miners’ Strike (1984)
- Big Bang (1986)
- The Austerity Plan (France)
- The Birth of the RMI (France)
#1. Britain from 1979 to 1990
#A. The foundations of Thatcherism: ideology, its impact on the economy, trade unions, and the welfare state
Thatcherism marked a decisive break from the post-war consensus that had shaped British politics and economics since 1945. It introduced a radical reorientation of policy, dismantling the established framework of state intervention, strong trade unionism, and welfare state expansion. Margaret Thatcher rejected the idea of a managed economy and state-led social provision in favour of free-market principles, individual responsibility, and reduced government influence. As she reflected in her memoirs, “The Labour Party gloried in planning, regulation, controls and subsidies… The Tory Party never tried seriously to reverse it”, until her government. Thatcherism thus not only redefined the Conservative Party’s platform but reshaped British society itself.
The expression “Iron Lady” originated from a Soviet journalist in 1976, when she took the lead of the British Conservative Party. Though meant to criticise her, Thatcher embraced it, turning it into a symbol of her firmness, determination, and uncompromising leadership style.
#a) Initial phase 1979–1983, tackling inflation through monetarism
At the outset of her premiership, Margaret Thatcher prioritised the fight against inflation, which she considered Britain’s most pressing economic challenge. To address it, her government embraced monetarism, an economic theory most associated with Milton Friedman and the hayekian views on state intervention. Monetarism argued that inflation stemmed primarily from excessive government spending and an uncontrolled money supply. The Thatcher government responded by slashing public expenditure, such as cutting grants to local councils in the 1979 budget, and maintaining high interest rates to strengthen the pound on international markets.
This strategy yielded results: inflation dropped sharply from 19% in 1979 to 5% by 1983, marking a clear policy success. However, the consequences of this economic shock therapy were severe. Unemployment soared, reaching three million by 1982, and Thatcher made clear she saw this as a necessary price to pay to bring inflation under control. She believed the shift away from traditional industries and employment patterns was part of a vital modernising process. Yet, the human cost was high, particularly in industrial towns and cities, and social unrest followed. In 1981, major urban riots erupted, most notably in Brixton, South London.
Despite the economic downturn and rising joblessness, the economy was partially stabilised by revenues from North Sea oil, which helped Britain avoid a balance of payments crisis and cushioned the worst effects of stagflation. Nevertheless, by 1982, Thatcher had become one of the most unpopular prime ministers in British history, with her approval ratings plunging to just 27% in public opinion polls.
#b) The 1982 Falklands War, a decisive turning point for Thatcher
The Falklands War proved a critical moment in Margaret Thatcher’s premiership, allowing her to emerge as a resolute and commanding wartime leader. The long-standing dispute over the sovereignty of the Falkland Islands culminated on 2 April 1982, when Argentina’s military junta ordered the invasion and swiftly overwhelmed the small British garrison stationed there. Thatcher, rejecting UN mediation, insisted that the matter be resolved exclusively by Britain, and launched a naval task force to retake the islands. By June, Argentina had surrendered, and Britain had secured a significant military and political victory.
The war had far-reaching consequences for both domestic and international perceptions of Thatcher’s leadership. Her determination drew comparisons with Churchill, as she was seen to have restored national pride at a time when Britain’s global influence seemed to be in irreversible decline. The phrase “The Empire strikes back” captured the patriotic fervour that swept the country, contrasting sharply with the pessimism of the 1970s. The successful campaign also strengthened the UK’s ‘special relationship’ with the United States, particularly through the use of American bases.
Politically, the victory transformed Thatcher’s fortunes. Previously one of the most unpopular prime ministers in modern times, she now experienced a dramatic surge in popularity. The press rallied behind her, Conservative grassroots activists were energised, and even some traditional Labour voters shifted their support. This surge in nationalistic sentiment and personal approval provided the momentum for her decisive victory in the 1983 general election. The Falklands War not only bolstered Thatcher’s self-confidence and authority within her party but also reinforced her image as a leader capable of decisive action on the world stage.
#c) Curbing trade union power, confronting a key adversary
One of the central aims of Thatcher’s domestic agenda was to reduce the influence of trade unions, particularly the powerful National Union of Mineworkers (NUM), led by the militant Arthur Scargill. Early on, the government introduced legislation in 1982 that required strike ballots and banned mass picketing, making it harder for unions to mobilise industrial action. At the same time, the government built up coal reserves and relied on energy from the North Sea, preparing itself to avoid a repeat of the 1973 “three-day week”.
The most significant showdown came during the miners’ strike from March 1984 to March 1985. The government argued that the coal industry was outdated and losing money, requiring large public subsidies. Ian McGregor, head of the National Coal Board and known for his tough approach in the US, was brought in to oversee pit closures, 173 in total, threatening 187,000 jobs.
The NUM resisted fiercely. Scargill claimed that with the right investment, British coal had a future. But this was also about more than money: in coalfield regions like South Wales and Yorkshire, mining was part of community identity. Pit closures risked destroying entire towns.
The strike turned violent at times. A defining moment came at the ‘Battle of Orgreave’ in June 1984, where thousands of miners clashed with police in riot gear. The scale and aggression of the police response shocked many, and confidence in the police was shaken, particularly in working-class areas.
In the end, the strike failed. The pits closed, and union power was broken. While many praised Thatcher for standing firm and bringing modernisation, the social cost was enormous. Entire communities were devastated, deepening the North-South divide.
Politically, the crisis cemented Thatcher’s authority. Her firm leadership stood in sharp contrast to the indecisive responses of past leaders like Heath or Callaghan. Public opinion was largely behind her, 65% supported the government and police. Union membership declined sharply after 1984, and the NUM was left divided and weakened.
The miners’ strike became a defining moment of Thatcher’s time in office. It changed Britain’s economic landscape and marked the decline of traditional union power for decades to come.
#d) Reinstating free market principles, supply-side reforms and reducing state control
Margaret Thatcher’s economic philosophy centred on the belief that the state had become too large and too involved in people’s lives. She sought to “take government off the backs of the people” by curbing state control over the economy and restoring free market principles. Her key adversary in this battle was the idea of the state-run economy and overregulation.
The free market is an economic system in which supply and demand determine prices and production, with minimal government intervention. Thatcher believed that economic efficiency and individual freedom would thrive in such a system.
One of her first priorities was to cut what she saw as wasteful government spending, especially on welfare. This was part of a broader effort to reduce the Public Sector Borrowing Requirement (PSBR), the amount the government needed to borrow to fund its spending. A high PSBR was seen as a sign of economic irresponsibility and a threat to inflation control. Reducing it became a key target of Thatcher’s monetarist agenda.
Thatcher's approach drew heavily on supply-side economics, which emphasised incentivising production and investment through tax cuts and deregulation.
This led to a reduction in direct income taxes—but also to a rise in indirect taxes such as VAT, National Insurance contributions, and local rates, meaning that while the tax burden shifted, it did not necessarily decrease for everyone.
Deregulation became another major tool of economic reform. The aim was to remove restrictive financial and legal controls to encourage entrepreneurship and competition:
In finance, credit controls were abolished. The Big Bang in 1986 deregulated the City of London’s stock market, introducing a new era of aggressive, international financial trading and the rise of so-called “yuppies” (young, upwardly-mobile professionals).
In transport, bus services were deregulated to encourage private operators.
In education, schools could opt out of local authority control and manage their own budgets.
In healthcare, hospitals were required to operate as part of an ‘internal market’, managing their own finances like independent institutions.
Privatisation was one of the most visible and radical aspects of Thatcher’s economic agenda. This involved selling nationalised industries to private investors, with the twin goals of increasing efficiency and encouraging “popular capitalism”, widening the ownership of shares among ordinary people. Between 1979 and 1990, the number of shareholders in the UK rose from 3 to 9 million.
Privatisation was driven by the idea that public sector industries were inefficient and overly reliant on taxpayer money. As Thatcher famously declared: “private good, public bad.” Over 50 state-owned enterprises were sold, including major firms like British Telecom (1984), British Gas (1986), British Airways (1987), and Rolls-Royce (1987). To ensure wide participation, shares were often sold cheaply. One of the most iconic examples was the 1986 “Tell Sid” campaign, which promoted the sale of British Gas shares to ordinary citizens. It encouraged people who had never owned shares before to become small-scale investors, a move designed to build a culture of ‘popular capitalism’, though critics argued it masked the fact that wealth was still concentrated among the already-wealthy.
As a result, government revenue from privatisation rose dramatically, from £377 million in 1979, 80 to £7 billion by 1988–89.
Though the early years of these reforms were marked by economic hardship, privatisation and deregulation helped lay the foundations for Britain’s economic recovery by the late 1980s, turning the City of London into a global financial powerhouse.
#e) Reforming local government, confronting left-wing councils
Thatcher also turned her attention to local government, especially targeting what she saw as wasteful and ideologically driven left-wing councils. These local authorities were often accused of overspending and resisting her national policies, becoming symbolic of the kind of state inefficiency she wanted to dismantle.
The government’s response came with the 1986 Local Government Act, which abolished several large metropolitan councils, including the Greater London Council (GLC). This move significantly reduced local autonomy and shifted more power to central government.
In the short term, this was seen as a victory over the so-called “loony left” and allowed Thatcher to further streamline decision-making. However, the centralisation of power had unintended consequences. With local authorities stripped of their responsibilities, the national government became solely accountable for many local issues. Historian Roy Jenkins described this outcome as the “nationalisation of blame,” meaning the government now had to answer for problems it previously shared with local bodies.
In effect, Thatcher had taken on and defeated what she saw as the three main obstacles to her vision of a freer, more market-oriented Britain:
- the trade unions,
- the state-controlled industries,
- and the left-wing local councils.
Each victory reshaped British politics, but also introduced new challenges for the future.
#f) The downfall of Margaret Thatcher in 1990
After more than a decade in power, Margaret Thatcher’s time as Prime Minister came to a dramatic end in 1990. Several key factors, both economic and political, contributed to her resignation.
The economy was a major source of pressure. Despite earlier successes in reducing inflation, by 1990 it had climbed again to 10.9%, higher than when Thatcher first came to office in 1979. The effects of the 1987 stock market crash were also being felt, raising fears about economic instability. As living costs rose and the benefits of Thatcher’s reforms appeared unevenly distributed, public discontent grew.
The poll tax controversy was the tipping point. Introduced in 1990, the Community Charge, popularly known as the poll tax, was designed to make local taxation fairer by charging everyone the same, regardless of property value. However, it was deeply unpopular and seen as unjust. It sparked mass protests, including a major demonstration in London attended by 200,000 people that descended into riots, leaving hundreds injured. The policy alienated not only the public but also many within the Conservative Party and the press. As disapproval spread, it gave Thatcher’s opponents a clear rallying point.
Thatcher’s leadership style also caused unrest within her own party. Over the years, her increasingly authoritarian approach had pushed many once-loyal MPs to the sidelines. Among those who felt increasingly marginalised were the so-called “wets”, moderate Conservatives who had always been uneasy with Thatcher’s hardline economic policies and combative leadership style. This approach became known as “conviction politics”, a leadership style grounded in firm ideological beliefs rather than consensus-building or political compromise. Many had been replaced or silenced by “dries”, Thatcher’s firm ideological allies who shared her vision of economic liberalisation and reduced state power.
A crucial moment came in 1990 when Geoffrey Howe, a senior minister and long-time ally, resigned in protest at her hardline stance on Europe. His resignation speech, broadcast live on television, was a thinly veiled attack on Thatcher’s leadership. It struck a powerful chord with many in the party, especially those uncomfortable with her combative opposition to deeper European integration, as voiced in her famous 1988 Bruges speech.
The final blow came from within the Conservative Party itself. Sensing electoral defeat if Thatcher remained leader, her rivals moved against her. Michael Heseltine, a prominent Conservative, launched a leadership challenge. Although she won the first round, the scale of the rebellion was clear: she had lost the support of two-fifths of her MPs. After consulting her cabinet and realising she could no longer rely on their full backing, Thatcher reluctantly agreed to step down. Her parting words reflected the bitterness of her exit: “It is something I will never forget and never forgive.”
Thatcher’s resignation marked the end of an era. Loved and loathed in equal measure, her legacy would continue to shape British politics long after she left office.
#g) Summary
| Period | Key political and economic priorities | Major actions and reforms | Consequences and impact |
|---|---|---|---|
| 1979–1983 | - Combat inflation - Reduce public spending - Restore stability |
- Adoption of monetarism - Cuts to public services - High interest rates |
- Inflation dropped - Unemployment rose - 1981 riots - Early unpopularity |
| 1982 | - Assert international authority - Restore national pride |
- Falklands War | - Military and political victory - Surge in popularity - Strengthened leadership |
| 1983–1985 | - Weaken trade union power - Modernise industry |
- Anti-union legislation - Miners’ strike confrontation |
- Union defeat - Industrial restructuring - North–South divide widened |
| 1983–1987 | - Promote free market - Reduce state role - Encourage enterprise |
- Tax reform - Deregulation (Big Bang 1986) - Initial privatisations |
- Consumer society - Financial boom - Widened inequality |
| 1987–1990 | - Expand privatisation - Centralise governance |
- Continued sell-offs - Abolished metropolitan councils - Introduced poll tax |
- Short-term control - Public backlash - Growing party division |
| 1990 | - Defend legacy - Manage dissent - Address economic concerns |
- Poll tax crisis - Heseltine leadership challenge - Howe resignation |
- Lost party support - Resignation - End of Thatcher era |
#B. The impact and legacy of Thatcherism on British society
#a) A more individualist and divided society
Thatcher’s economic policies profoundly reshaped British society, steering it away from collectivism towards a more individualist ethos. Her famous assertion in 1987 that “there is no such thing as society” captured this shift. Central to her approach was the belief that individuals, not the state, should take responsibility for their own lives.
However, the social consequences were stark. The top rate of income tax was reduced, benefiting the wealthiest, while indirect taxes such as VAT and National Insurance increased, disproportionately affecting the poor. Child benefit payments were frozen, limiting support for families, particularly women. Cuts in government expenditure, aimed at controlling inflation, also meant less funding for welfare and public services.
The privatisation of state-owned industries led to widespread job losses and economic insecurity, especially in regions reliant on heavy industry. As traditional industries declined, youth unemployment surged, contributing to a sense of disaffection and social alienation. The result was a widening gap between rich and poor and a sense of fragmentation across many communities.
#b) The long-term legacy of Thatcherism
Thatcherism left a defining imprint on Britain, not only economically but politically and ideologically. It marked a clear break from the post-war consensus that had prioritised state intervention, welfare expansion, and social partnership.
At its core, Thatcherism promoted:
Free markets and monetarist economic control;
Large-scale privatisation to encourage competition and reduce state influence;
A rejection of Keynesianism and the politics of consensus;
A tough stance on trade unions to prevent a return to the chaos of the 1970s;
A culture of self-help, individual initiative, and reduced dependency on the state;
Resistance to political integration within the European Community, maintaining a vision of Europe as an economic, not political, union.
For supporters, Thatcherism brought modernisation, efficiency, and a renewed sense of national purpose. For critics, it fostered inequality, undermined social cohesion, and weakened the role of the state in protecting vulnerable groups. Either way, it transformed the political landscape of Britain and continued to influence government policy long after Thatcher left office.
#C. Competing views of Thatcherism
#a) Was there a ‘Thatcher Revolution’, 1979–1990?
Before becoming Prime Minister, Margaret Thatcher had served under Edward Heath, whose government struggled with economic crisis and union resistance in the early 1970s. Although Thatcher later broke sharply with Heath’s approach, she emerged from that political world. The ideological foundations of what became known as Thatcherism were already taking shape by the late 1940s and 1950s with thinkers like Friedrich Hayek, whose The Road to Serfdom (1944) warned against excessive state control. In the 1970s, rising voices within the Conservative Party, such as Enoch Powell, began advocating for reduced state intervention, national identity, and economic liberalism. This intellectual climate, often termed the 'New Right', provided the blueprint for what would later be framed as the Thatcher Revolution.
| Dimension | Evidence of Revolution | Continuities or counterpoints |
|---|---|---|
| Economic policy | Shift from Keynesianism to monetarism and supply-side economics. Massive privatisation programme. |
Use of North Sea oil revenues continued. Not all state responsibilities dismantled (e.g. NHS). |
| State intervention | Reduced role of the state in economy, deregulation of finance, cuts to public sector. | State remained powerful in enforcing change (e.g. in policing, or repressing miners' strike). |
| Trade unions | Crushing of NUM in 1984–85. Legislation curbing union power. |
Some union opposition persisted into the 1990s (e.g. public sector strikes). |
| Local government | Abolition of GLC and other metropolitan councils. Centralisation of authority. |
Central government took on increased responsibility — “nationalisation of blame”. |
| Political culture | Introduction of “conviction politics”, ideology-driven leadership. Sidelining of “wets”. |
Cabinet divisions and leadership challenges remained, notably in final years. |
| Social impact | Individualism promoted. Popular capitalism (e.g. “Tell Sid” campaign). |
Rising inequality, regional decline, and social unrest (e.g. 1981 riots). |
| Conclusion | Major, ideologically driven shift across politics, economy, and governance. Clearly a revolutionary agenda. | Success was uneven and deeply divisive. Long-term legacy debated. |
#b) A radical and successful break with the past
| Criteria | Evidence of radical break | Evidence questioning Success or continuity |
|---|---|---|
| Economic direction | Break with consensus economics, adoption of monetarism and free-market reforms. | Recession and hardship in early 1980s; inflation returned by 1990. |
| Social policy | Cuts to welfare, promotion of self-reliance and private enterprise. | Increased poverty, youth unemployment, and regional inequality. |
| Union relations | Major confrontation with and defeat of trade unions. | Created long-term mistrust between working class communities and government. |
| Government structure | Shift of power from local councils to central state. | Created governance challenges — local issues blamed on national government. |
| Cultural transformation | Rise of “yuppies”, shareholder democracy, weakening of collective institutions. | Cultural polarisation: some saw this as national rejuvenation, others as social erosion. |
| Foreign policy & defence | Stronger assertion of British power (e.g. Falklands War), closer US relations. | European policy tensions contributed to internal party divisions. |
| Legacy | Enduring change to Conservative Party identity and British political landscape. | Controversial: admired for strength, criticised for division and inequality. |
#c) Critical view of the "radical and successful break"
| Critique dimension | Limitation or contradiction | Explanation or example |
|---|---|---|
| Economic sustainability | Return of inflation by 1990. Rising interest rates. 1987 stock market crash. |
Economic volatility persisted; long-term stability was not assured. |
| Social inequality | Widening North–South divide. Deindustrialised regions suffered long-term decline. |
Gains were regionally skewed; many communities never recovered. |
| Public services | Welfare cuts and funding freezes (e.g. child benefit). Strain on NHS and education. |
Critics argue this weakened the social contract and undermined access to essential services. |
| Popular support | 1981 urban riots. Poll tax protests (1990). Initial deep unpopularity. |
Her policies provoked significant unrest; mass mobilisation against government. |
| European relations | Anti-integration stance alienated pro-Europe Conservatives. Bruges speech (1988). |
Fuelled long-term divisions in the Conservative Party, which contributed to her fall. |
| Party unity | Sidelining of “wets”. Howe’s resignation. Leadership challenge by Heseltine. |
Leadership style fostered internal conflict; weakened loyalty. |
| Cultural backlash | “No such thing as society” drew fierce criticism. Rise in political satire and protest movements. |
Many viewed Thatcherism as eroding solidarity and communal values. |
| Long-term contradictions | Deregulated finance contributed to future instability (e.g. 2008 crisis). Some privatised utilities criticised. |
The free market model was later blamed for inefficiency, inequality, and lack of oversight. |
#2. France, 1981 to 1988
#A. From socialism to austerity, the shift in economic strategy
In 1981, François Mitterrand was elected President of the French Republic, leading a broad alliance of left-wing parties that had come together around the Common Programme (Programme commun) of the 1970s. At the heart of this programme was a commitment to reassert the role of the state in managing the economy, in response to the ongoing economic crisis. This meant adopting a Keynesian approach: stimulating demand through public spending in order to boost consumption and growth.
Mitterrand’s first years in office were marked by ambitious reforms that reflected this vision. However, by 1983, facing a deteriorating economic situation, the government shifted its priorities. The economic crisis and pressure from financial markets forced a change of course, known as the “tournant de la rigueur”, a turn towards austerity. From this point, Mitterrand’s presidency increasingly moved in a more liberal economic direction, culminating in the political compromise of cohabitation.
#a) 1981 to 1983, the break with the past and the triumph of socialism
#A historic shift in power
In May 1981, François Mitterrand defeated the incumbent President, Valéry Giscard d’Estaing, becoming the first Socialist president under the Fifth Republic. This marked a historic political shift, known in France as l’alternance, whereby political power changed hands between opposing ideological camps, in this case, from the Right to the Left.
The legislative elections that followed further reinforced this transformation. The Left, led by the Socialist Party (PS), secured an absolute majority in the National Assembly. This gave Mitterrand the political space to implement his ambitious reform agenda and attempt to bring socialism to power within the institutions of the Republic.
#Implementing the socialist programme
Following the Left's electoral victory in 1981, President Mitterrand was in a position to implement his ambitious political programme, notably through the appointment of Pierre Mauroy as Prime Minister (1981–1984). At the heart of this agenda were the “110 propositions” of the Socialist Party. It was a political platform promising to “change life” and marking a deliberate rupture with the economic and social policies of previous governments.
The state was to play a central role in this vision, with an expanded welfare state and a planned economy. Key measures included the nationalisation of major banks such as BNP Paribas and several key industrial groups, including Dassault Aviation in the military sector. These nationalisations were a clear expression of socialist economic policy, intended to shift control from the private to the public sector. Alongside this, a new wealth tax was introduced, and the minimum wage was increased by 10 percent. Working conditions were also reformed: the legal working week was reduced from 40 to 39 hours, the retirement age was lowered to 60, and a fifth week of paid holiday was introduced. Social benefits, including family and housing allowances, were raised by 25 percent.
In parallel with these economic and social reforms, the Mauroy government implemented a series of progressive political and cultural measures. These included the abolition of the death penalty, the decriminalisation of homosexuality, and legislation enabling the legalisation of private local radio stations and the creation of France’s first private television channels, such as Canal+. The government also regularised the status of undocumented foreign workers able to prove their employment and established legislation for pay equality between men and women in the workplace.
Culturally, Mitterrand’s presidency sought to democratise access to culture and celebrate French identity. The Fête de la musique was introduced in 1982 as an annual national music celebration, while large public works projects, such as the construction of the Louvre Pyramid and the Grande Arche at La Défense, symbolised the modernisation of France. A key reform during this period was also the introduction of the fixed book price law, guaranteeing a single retail price for books to protect independent booksellers and promote cultural diversity.
#b) The 1983 austerity turn, a reluctant economic U-turn
#The shift towards austerity and its underlying causes
In 1983, François Mitterrand’s government made a dramatic shift in economic policy, commonly referred to as the tournant de la rigueur (the austerity turn). This marked a turning point away from the expansive socialist reforms of the early presidency towards budgetary discipline and liberal economic measures. This U-turn was not ideological, but rather imposed by a series of constraints operating at different levels.
On a global scale, the aftermath of the two oil shocks had triggered a sustained economic crisis, marked by stagnation and rising unemployment, a period later described by economist Nicolas Baverez as les Vingt Piteuses (the “Twenty Pitiful Years”), covering 1975 to 1995. This era stood in stark contrast to the prosperity of the post-war Trente Glorieuses and forced many governments to abandon Keynesian strategies.
At the European level, France’s participation in the European Monetary System (EMS) placed pressure on the government to maintain the parity between the franc and the West German mark. This required controlling inflation and avoiding devaluation, pushing France to abandon expansionary policies that risked monetary instability.
Domestically, the situation had become unsustainable. Capital flight increased as wealthy individuals and businesses moved their assets abroad. The budget deficit widened, inflation accelerated, and economic growth remained weak, hovering around just 1%. As a result, unemployment continued to rise, from 1.5 million in 1981 to 2.2 million by 1988.
France’s Keynesian stimulus programme stood in opposition to the emerging global economic order, which by the early 1980s was shifting towards neoliberalism, as exemplified by the policies of Margaret Thatcher in the UK and Ronald Reagan in the US. In this international context, investors turned away from France’s interventionist approach and towards countries perceived as more business-friendly. The resulting lack of investment capital, combined with the undercapitalisation of recently nationalised industries, led to underinvestment, preventing the French economy from achieving the rebound that the initial stimulus had hoped to deliver.
#A turn towards liberalism, the end of Keynesian ambitions
Faced with mounting economic pressures and the constraints of European integration, the French government in 1983 found itself at a crossroads. It had to choose between leaving the European Economic Community’s monetary framework or adopting a policy of austerity to stabilise the franc within the European Monetary System (EMS). The decision was to remain within the EMS, which meant embracing a new economic direction.
The objectives of this shift were clear: to bring inflation under control and reduce the public deficit. This entailed a series of measures aligned with monetarist thinking, including significant reductions in public spending, a freeze on wages, and an increase in fuel taxes. In parallel, the government initiated a cautious move towards privatisation and partially deregulated financial markets, steps that signalled a departure from the more interventionist economic stance of earlier years.
Strikingly, it was a Socialist-Communist coalition that implemented this partial abandonment of Keynesian economics in favour of a more market-oriented, neoliberal approach. For many on the Left, this was seen as a betrayal of the ideals that had brought Mitterrand to power. The austerity measures alienated a large section of the Socialist Party’s traditional base, leading to growing disillusionment and a decline in support from left-wing voters.
#c)The first cohabitation, 1986 to 1988, and the return to liberal reform
#A new political balance
By 1986, the French Left had become deeply unpopular, primarily due to the economic austerity measures introduced since 1983. In the legislative elections that year, the Right regained political dominance, securing an absolute majority in the National Assembly. As a result, President François Mitterrand was constitutionally obliged to appoint a Prime Minister from the new parliamentary majority. He chose Jacques Chirac, the leader of the conservative RPR (Rally for the Republic). This marked the beginning of the first cohabitation under the Fifth Republic.
Cohabitation refers to a political situation in which the President and the Prime Minister come from opposing ideological camps, in this case, a Socialist president and a right-wing Prime Minister. It represented a major institutional test for the semi-presidential system established in 1958, challenging conventional notions of executive power in the French Republic.
During this period, political leadership and policy direction shifted towards the liberal right. While Mitterrand retained control over foreign policy and defence, domestic and economic policy largely came under Chirac’s authority. This new arrangement reinforced the liberal economic direction that had begun in 1983, with continued deregulation and the resumption of privatisation efforts, symbolising the enduring influence of market-oriented reforms, even under a divided executive.
#A liberal agenda under a right-wing government
During the period of cohabitation (1986–1988), Prime Minister Jacques Chirac pursued a markedly liberal economic agenda. With the backing of a right-wing parliamentary majority, the government implemented a series of reforms aimed at reducing the role of the state in the economy and increasing market efficiency.
One key pillar of this approach was the adoption of New Public Management, a concept borrowed from neoliberal theory. It sought to make public services more efficient and less costly by introducing management practices from the private sector. This entailed cutting back state spending and shifting towards a results-driven logic in the administration of public services.
The government also relaunched a sweeping programme of privatisations, including high-profile firms such as TF1 and major financial institutions like BNP Paribas and Société Générale. These sales raised approximately 26 billion euros, signalling a clear departure from the nationalisation policies of the early Mitterrand years.
Other significant reforms included the abolition of the administrative authorisation required for redundancies, making it easier for companies to lay off workers, and the elimination of the wealth tax. Additionally, the government ended price controls, further liberalising the economy.
These moves sparked widespread resistance, especially from trade unions and left-wing parties. Yet despite the tensions, the political backlash ultimately worked in Mitterrand’s favour.
Capitalising on the discontent, he was re-elected president in 1988, defeating Jacques Chirac with 54% of the vote. His victory marked the end of the first cohabitation and the beginning of a new political phase.
#B. Assessing the impact of Mitterrand’s presidency, 1981 to 1988
François Mitterrand’s first term brought substantial changes to French society, politics, and economics. His presidency was marked by ambitious reforms and ideological shifts, but also by growing contradictions and policy reversals. The following outlines his major successes and failures across four key areas.
#a) Political reforms and civil liberties
Mitterrand’s presidency is often credited with significant progress in civil liberties and democratic freedoms. His government abolished the death penalty, decriminalised homosexuality, and liberalised the media landscape by authorising local private radio stations and supporting the creation of France’s first private television channels, including Canal+. He also implemented a policy of regularising undocumented migrants who could prove employment, and passed legislation promoting wage equality between men and women.
However, these progressive achievements were offset by political tensions within his own party. The Socialist Party experienced internal division between Social Democrats and the more traditional Left. Moreover, the 1983 U-turn towards austerity, the "tournant de la rigueur" , alienated many working-class voters who had initially supported his electoral promises.
#b) Economic policy outcomes
Economically, Mitterrand’s presidency was defined by a striking contrast. In the early years, his government pursued a bold programme of nationalisations in banking and industry, reflecting its commitment to state intervention. Later, under pressure from global financial trends and European commitments, this gave way to liberalisation and privatisation efforts, especially during the period of cohabitation with the Right.
Despite these shifts, economic growth remained weak, averaging between 1% and 2% per year. The limited growth cast doubt on the effectiveness of both policy directions and exposed France’s vulnerability in a changing global economy.
#c) Social achievements and shortcomings
Mitterrand also left a lasting imprint on French social policy. Key reforms included the reduction of the working week to 39 hours, the lowering of the retirement age to 60, and the introduction of a fifth week of paid holiday. These measures strengthened the foundations of the French welfare state and are still widely regarded as part of its core structure today.
Nonetheless, these gains were accompanied by a troubling rise in unemployment. The jobless rate increased from around 7% in 1981 to nearly 10% by 1988, reflecting the structural challenges facing the French economy and the limits of social protection in combating economic decline.
#d) Cultural investment and national prestige
Cultural policy under Mitterrand was both ambitious and symbolic. His government allocated 1% of the national budget to culture, reflecting a strong belief in its role in promoting national identity and soft power. Major initiatives included the creation of the Fête de la musique in 1982, the construction of landmark public works like the Louvre pyramid and the Grande Arche at La Défense, and the introduction of a fixed book price law to protect small booksellers and preserve literary culture.
These cultural policies helped enhance France’s international image and reinforced its role as a global centre of arts and intellectual life.
#e) Mitterrand, a Socialist in name only?
| Dimension | Evidence supporting a socialist identity | Evidence suggesting a retreat from socialism |
|---|---|---|
| Political reforms | - Abolition of the death penalty - Decriminalisation of homosexuality - Gender pay equality - Legalisation of private radio |
- Party tensions over direction after 1983 - Left-wing disillusionment with policy reversal |
| Economic policy | - Nationalisation of banks and key industries - Introduction of wealth tax - Keynesian stimulus strategy (1981–1983) |
- U-turn in 1983: austerity, monetarism - Alignment with European monetary constraints - Embrace of market discipline |
| Social measures | - Retirement at 60 - 39-hour workweek - Increase in minimum wage and welfare support |
- High unemployment persisted (7% to 10%) - Social inequalities remained unresolved |
| Cultural policy | - Cultural budget set at 1% - Fête de la musique - Major public architectural projects (Louvre pyramid, La Défense) |
- Cultural policies largely symbolic; less impact on socioeconomic inequality |
| 1986–88 cohabitation | - Maintained symbolic presidency - Re-election in 1988 showed popular support |
- Chirac-led government implemented liberal reforms: privatisations, deregulation, tax cuts |
| Overall evaluation | Demonstrated a genuine socialist agenda early on with enduring reforms in social and cultural domains | Economic policy reversed significantly under pressure, making his socialism appear pragmatic and adaptive rather than doctrinaire |
In both Britain and France, the 1980s did not just reshape economies, they reshaped identities. Citizens were recast as consumers, solidarity gave way to individualism. For some, it was liberation. For others, it was exile within their own countries.