Unemployment and Economic Realignment
Thatcher reversed post-war priorities, viewing inflation rather than unemployment as the main enemy. Interest rates hit 17% in 1979, triggering a brutal recession that permanently closed many industrial plants.
Unemployment peaked at 3 million (13.5%) in 1983 - the highest since the 1930s. Manufacturing output collapsed by 15%, with steel production cut by 30%. This "deindustrialisation of Britain" devastated traditional industrial communities, especially in the North.
The economy shifted towards services, creating a stark North-South divide. Areas like Liverpool saw 25% unemployment whilst London and the South prospered. The 1981 riots in Brixton, Handsworth, and Toxteth reflected the social cost of economic realignment.
Stark Reality: Chancellor Howe suggested letting northern cities face "managed decline" - a brutal admission that some communities were being sacrificed for economic transformation.