This blog provides another excerpt in the unfolding story about Britain and the IMF. We pick up yesterday’s story with Britain mired in inflation and rising unemployment as the OPEC oil price rises impact in late 1973. The Tories under the leadership of Edward Heath were trying to deal with internal divisions between the traditional One Nation Conservatists (Heath) and the emerging, right-wing Monetarists. Edward Heath resisted the Monetarists through his term of office and used very traditional ‘Keynesian’ remedies in an attempt to reduce unemployment (for example, the ‘Dash for Growth’) but maintained the usual Tory hostility towards trade unions. His efforts in stimulating growth were stymied by the oil price rises, which spawned a major inflationary outbreak. The Tories blamed the unions and OPEC for the inflation, which, in part, was correct, but then invoked a period of damaging austerity which left the nation in a sorry state. They lost office in February 1974. In this blog, with Harold Wilson back in charge for the second time and his party becoming increasingly infested with Monetarist thinking, we consider the inflation problem in some detail, the lack of any credible evidence to support the Monetarist causality, as a means to understanding how disappointing Prime Minister James Callaghan’s famous 1976 Black Speech to the Labour Party Conference was in terms of maintaining the credibility of the British Labour Party then – and how it opened the way, not only for Margaret Thatcher to wreak havoc, but also for the emergence of the insidious New Labour, which continues to hobble progressive elements in the Party today. It was a major turning point in Left history and needs careful deconstruction.