To what extent was Callaghan's premiership a failure?

One of the factors that lead to the view that Callaghan's premiership was a failure was the economy. Source 7 states that “Callaghan's premiership is forever associated with failure” as a consequence of the “soaring inflation”. Furthermore, Source 9 highlights that the government promised to “keep inflation in check” which emphasises what a big problem it was for both the worried public and the image of the government. Inflation had “broken all records under the Wilson government” reaching 24% in 1975 due to the rise in oil prices in 1973, and Callaghan's government had inherited this problem in 1976. The rising inflation caused the value of the pound to drop below $2 for the first time ever. This as well as the huge debt which had resulted from the balance of trade deficit meant that Britain was in danger of bankruptcy. Therefore, Britain was forced to resort to what Source 7 describes as “the humiliating, cap-in-hand begging for help from the International Monetary Fund”. In September 1976, Denis Healey, the Chancellor of the Exchequer, began negotiating a loan of £3 billion from the IMF. In order to receive the loan, the government had promised to make cuts to public expenditure which was extremely unpopular with the public and especially the unions. The crisis also lead to a split in the Labour Party as the left of the party refused to accept that the cuts were necessary and felt that their policies were becoming too close to the Conservatives, and the right of the party argued that the government was appearing to be weak due to the trade union threats and were detaching themselves from the voters. This split is indicated in Source 8 when it says that the “Labour MPs were ready to follow anyone who would save their seats” suggesting that they were not all very attached to Callaghan and didn't completely support him as a leader. As a further consequence of the IMF Crisis and the following expenditure cuts, unemployment reached 1.6 million in 1978 which cemented the view that Callaghan's premiership had been a failure. Therefore, it can be argued that Callaghan had failed with regards to the economy as the inflation had threatened to bankrupt the country, the resulting IMF Crisis humiliated the government and made them appear to be weak and the expenditure cuts had lead to them becoming very unpopular and had sparked the problems with the trade unions.

On the other hand, the economy can be seen as a success for Callaghan's premiership. Source 9 states that the government “brought inflation under 10% for the first time in a decade”. This was due to the IMF loan that Callaghan had secured. Although asking for the loan had been humiliating, the worsening stagflation during the 1970s which had brought Britain to the brink of bankruptcy had made the load unavoidable and if Callaghan had failed to receive the loan, Britain would have been a lot worse off. In this way, the IMF Crisis can be seen as a success for Callaghan and his government. Furthermore, as inflation had been a huge problem that had tormented the previous governments, the fact that Callaghan managed to reduce it to “under 10%” can be seen as a major victory. Source 8 describes Callaghan's leadership as “calm” and “conservative”, while Source 9 reports that it was “steady” and this is shown through the way he dealt with the economic crisis. Callaghan made a landmark speech at the Labour Party Conference in September 1976, declaring that Britain had “been living on borrowed time” and this encouraged the public to be more careful with their money and warned them of the difficult times to come. By the end of 1977, partly as a result of the new oil revenues, there were improvements in the balance of trade. This is mentioned in Source 8 as it says that Britain became a “net exporter” which would have helped the economy to recover further. Due to this, Britain did not need to draw the full loan from the IMF