On Europe: Margaret Thatcher's Lasting Legacy

Expert comment Updated 10 May 2023 Published 9 April 2013 2 minute READ

Professor Richard G. Whitman

Senior Fellow, UK in a Changing Europe

Margaret Thatcher’s period as prime minister coincided with the most significant set of changes in Europe since the onset of the Cold War. It was marked by the revival of the project of Western European integration from the mid-1980s and the collapse of Communist regimes in Central and Eastern Europe in 1989-1990. Although not the architect of either of these developments, the manner in which she approached a changing Europe set the tone for her successor governments.

Margaret Thatcher’s policy on European integration was aggressive in public tone but pragmatic in practice. Prior to coming to power as prime minister, Margaret Thatcher’s public position on European integration was mainstream: she supported the accession of the UK to the European Communities in 1973 and campaigned for a yes vote in the British referendum on membership in 1975. As leader of the opposition from 1975, she led the Conservative Party into the General Election of 1979 and then into government on a Europe platform that did not question the fundamentals of British membership. The early Thatcher government European policy was pragmatic. However, a characteristic of the policy that soon emerged was a strident public articulation of what Mrs Thatcher considered to be in the UK national interest. This was demonstrated early on in her argument for a reduction in the UK’s payments to the budget of the Communities. Her characteristic rhetoric became a complication for the negotiating strategy to reduce the British financial contribution. The prolonged negotiations, conducted over four years, and the resultant UK budget rebate continues to mark the politics of the European Union and, as noted by the current British Prime Minister David Cameron on the news of her death that ‘When you negotiate in Brussels, it is still her rebate you’re defending.’

It is not just the nature of the budget settlement that has had an enduring impact on the UK’s European policy. In at least three other areas her legacy endures for the UK’s European policy and on the EU itself: on the European single market programme; the Exchange Rate Mechanism and the Euro; and Mrs Thatcher’s 1988 Bruges speech.

Although the programme to push for the elimination in non-tariff barriers to trade within the European Community was not of Margaret Thatcher’s own creation, she was an enthusiastic supporter of what came to be known as the Single Market Programme. The pragmatism in the European policy of her government was shown in her willingness to sign the Single European Act (SEA) in 1985 which expedited the necessary legislative programme to eliminate barriers to trade through arrangements such as qualified majority voting in the Council of Ministers. The SEA re-booted Europe’s economic integration and also reinvigorated the attendant political integration project, which Margaret Thatcher found more vexing, and politically troubling, as her premiership continued.

It was to be the early moves towards the Euro which were to see the agenda of European integration intrude into the domestic political agenda in a manner that created deep divisions within her government. Her doubts over membership of the Exchange Rate Mechanism, which was supported by her Chancellor Nigel Lawson and Foreign Secretary Sir Geoffrey Howe, led to a dispute that divided her administration with Lawson eventually resigning over the issue in 1989. Divisions within the Conservative Party on European strategy date from this time and impacted on succeeding British governments’ reticence to join the single currency.

Margaret Thatcher’s growing doubts on the direction of European integration were encapsulated in her Bruges Speech of 1988. This is the point of departure for the current Conservative Party position on Europe. Setting out a nascent vision for the EU that represented a counter-project to an integration agenda for Europe, it stands as one of the most politically influential speeches by a British prime minister on Europe since the UK’s accession in 1973. Although the speech itself was a balanced and nuanced assessment of the European project and made a case for its future direction, it has become totemic as a rallying cry for ‘less’ rather than ‘more’ European integration.

But perhaps Mrs Thatcher’s most important legacy is on the ‘other Europe’: the Europe of transition in Central and Eastern Europe after 1989. Within the transition countries of the Baltic and of Central Europe, the free market, and small state policies that Mrs Thatcher championed for the UK’s economy and society, became important points of inspiration for the governments emerging from Communism. Her name was frequently invoked as an inspiration, and short-hand for an approach to organizing economies on free market principles via policies such as privatization. Furthermore, Margaret Thatcher’s combination of strident Trans-Atlanticism paired with an approach to European integration which stressed economic liberalization over political union continues to echo.