Margaret Thatcher's term as the Prime Minister of the United Kingdom began on 4 May 1979 when she accepted an invitation of Queen Elizabeth II to form a government, and ended on 28 November 1990 upon her resignation. She was elected to the position in 1979, having led the Conservative Party since 1975, and won landslide re-elections in 1983 and 1987. She gained intense media attention as Britain's first female prime minister, and was the longest-serving British prime minister of the 20th century. Her premiership ended when she withdrew from the 1990 Conservative leadership election. While serving as prime minister, Thatcher also served as the First Lord of the Treasury, the Minister for the Civil Service and the Leader of the Conservative Party.
In domestic policy, Thatcher implemented sweeping reforms concerning the affairs of the economy, eventually including the privatisation of most nationalised industries, and the weakening of trade unions. She emphasised reducing the government's role and letting the marketplace decide in terms of the neoliberal ideas pioneered by Milton Friedman and Friedrich Hayek, promoted by her mentor Keith Joseph, and promulgated by the media as Thatcherism. In foreign policy, Thatcher decisively defeated Argentina in the Falklands War in 1982. In longer-range terms she worked with Ronald Reagan to wage a war against communism during the Cold War. However, she also promoted collaboration with Soviet leader Mikhail Gorbachev in ending the Cold War.
In her first years she had a deeply divided cabinet. As the leader of the "dry" faction she purged most of the One Nation "wet" Conservatives and took full control. By the late 1980s, however, she had alienated several senior members of her Cabinet with her opposition to greater economic integration into the European Economic Community, which she argued would lead to a federalist Europe and surrender Britain's ability to self govern. She also alienated many Conservative voters and parliamentarians with the imposition of a local poll tax. As her support ebbed away, she was challenged for her leadership and persuaded by Cabinet to withdraw from the second round of voting – ending her eleven-year premiership. She was succeeded by John Major, her Chancellor of the Exchequer.
First term (1979–1983)
Thatcher was Britain and Europe's first female prime minister. She appointed few women to high office and did not make women's issues a priority, but her pioneering election was widely hailed as an achievement for women in general.
Thatcher, having to share the media spotlight with Queen Elizabeth II and Diana, Princess of Wales, increasingly assumed regal poses, such as taking the salute at the victory parade after the Falklands War, and becoming the centre of attraction on foreign visits. Tensions between the two were kept hidden until 1986, when the Sunday Times reported on the Queen's alleged criticism of Thatcher's policies, especially regarding the people of the Commonwealth, as "uncaring, confrontational and socially divisive." Thatcher often ridiculed the Commonwealth, which the Queen held in very high esteem.
Economic affairs
Biographer John Campbell reports that in July 1978, before Thatcher became prime minister, when asked by a Labour MP in the Commons what she meant by socialism:
Deflationary strategy
Under Margaret Thatcher's government, the taming of inflation displaced high employment as the primary policy objective.
As a monetarist, Thatcher started out in her economic policy by increasing interest rates to slow the growth of the money supply and thus lower inflation. She had a preference for indirect taxation over taxes on income, and value-added tax (VAT) was raised sharply to 15%, with a resultant actual short-term rise in inflation. The fiscal and monetary squeeze, combined with the North Sea oil effect, appreciated the real exchange rate. These moves hit businesses—especially the manufacturing sector—and unemployment exceeded 2 million by the autumn of 1980, up from 1.5 million at the time of Thatcher's election just over a year earlier.