The reelection of Mrs Thatcher's Conservative Government to a third term of office in June 1987 was remarkable and deserves repeated and in depth analysis. The performance of the government, and Thatcherism need to be seen in terms of their success in reversing Britain's relative economic decline. How have its policies sought to break the pattern of decline? Has it adopted a consistent, and distinctive approach? Is the party's unprecedented electoral success a product of its economic policies? What does the future hold?

The following elements are crucial. The government has made its most important efforts in two main areas- towards the unions, and towards the fostering of the service sector of the economy. These policies, described in detail, have been important politically, and electorally (two terms which have different meanings and ramifications for the government). They are not, however, policies which are likely to provide the third Thatcher administration with automatic support in years to come. Recent accounts of the third victory have failed to recognize the precariousness of the Conservative government's position, in part exacerbated by the nature of the interests fostered the financial sector may prove to be an electoral liability, instead of an asset as before. The paper suggests that the ability of the government to win successive elections is evidence of the salience of factors which are often overlooked in political economy papers. The importance of expectations particularly in election year, of macro-economic variables controlled, to some extent, by the government, such as tax rates, and the relative unimportance of factors such as unemployment and inflation are also revealed by the Thatcher record.