Chancellor Callaghan, who had no economics background, had to share centre stage with Deputy Prime Minister George Brown’s new ministry, the Department of Economic Affairs.

Keeping the peace was Prime Minister Wilson, the best economist of the three, who would also have a major say on all the key economic policy issues.

Whilst Brown at the DEA was arguing for faster growth in the National Plan (3.8% pa), Callaghan at the Treasury needed deflationary policies to protect sterling (fixed against the dollar at $2.80) with a fragile balance of payments.

Wilson allowed the situation to drift. His most serious error was not devaluing or floating sterling immediately on taking office and, when devaluation eventually came in November 1967 (taking the pound down to $2.40), it was a humiliation which cost Callaghan the Treasury.

By then, Brown was at the Foreign Office, the DEA had been sidelined and the National Plan shelved. The new Chancellor, Roy Jenkins, had a freer run at economic policy making.

Continuing the earlier deflationary policies and control of incomes started under his predecessor, he was able, by the spring of 1970, to present an encouraging picture of the UK economy in terms of growth, the balance of payments and government finances. The underlying weaknesses in terms of inflation and unemployment would be exposed in the next Parliament.