Embarking on a policy popularly regarded as ‘monetarism’ (as opposed to the Keynesian approach of other governments), Chancellor Howe presided over an economy that got worse before it got better. Interest rates, inflation and unemployment all soared as the economy slipped into recession in 1980-81.

Inflation rather than unemployment was the prime target of policy.

The Treasury view was that since inflation was a monetary problem it required monetary solutions and, eventually, the surge in the Retail Prices Index began to ease.

Helped (in balance of payments and tax receipt terms) by the first generation of North Sea oil, the government implemented some radical supply side changes (privatisation, industrial relations reform and tax reforms) which, by the mid 1980s, produced a booming economy.

Serious errors of judgement in 1988, when Lawson was Chancellor, turned the boom into an old-fashioned bust. Loosening fiscal and monetary policies at entirely the wrong time led to inflation climbing back to double figures, base rates up to 15%, and a record balance of payments deficit.

By the time the recession took hold, both Mrs Thatcher and Nigel Lawson had left office and Lawson’s successor as Chancellor, John Major (whose major initiative as Chancellor was to take the UK into the ERM - the Exchange Rate Mechanism - in the autumn of 1990), moved next door to 10 Downing Street to pick up the pieces.

As Prime Minister, Major presided over the remaining 15 months of the 1987 Parliament and then was surprisingly re-elected in April 1992. His original choice as Chancellor, Norman Lamont, continued at the Treasury until Ken Clarke replaced him in May 1993. Clarke saw out the rest of the Conservatives’ long tenure.

Lamont had a torrid time at the Treasury. A recession, the result of earlier policy misjudgements, proved to be the longest and deepest the UK had experienced since 1945 and unemployment rose to three million.

Then, in September 1992, just as ‘the green shoots of recovery’ were starting to show, along came the humiliating exit from the Exchange Rate Mechanism. The government was shown to be powerless in the face of an onslaught on the over-valued pound by currency markets. ERM membership had been the cornerstone of the Major government’s economic policy and, politically, it never recovered from this debacle.

It was another seven months before Lamont left the Treasury, but he lost a lot of credibility when he claimed he had never believed in the ERM policy in the first place.

Lamont's successor, Ken Clarke, proved to be a very popular and very effective Chancellor. He was also very lucky. The steps Lamont took immediately following the ERM exit, setting an inflation target and establishing a panel to be consulted about interest rate changes, started to bear fruit. Whilst this stopped short of full independence for the Bank of England, it gave credibility to monetary policy.

Clarke also started to get to grips with the substantial public sector deficit, although again he was helped by Lamont’s phased tax increases.

By the time he left office, inflation was low and stable, growth robust and public sector borrowing under control.

Clarke could claim, with some justification, that by 1997, the UK had ‘the most benign economic environment for a generation’.

Despite the much-improved condition of the economy, the Conservatives suffered a massive defeat in the April 1997 election, disproving the famous Clinton slogan ‘It’s the economy, stupid.’ This time it wasn’t.