On this day, 5 June 2004, Ronald Reagan, the 40th president of the United States, died of pneumonia at his home in Bel-Air, California, at the age of 93. His passing marked the end of an era for conservative politics on both sides of the Atlantic, with his free-market ideology having a lasting impact on UK economic policy.
Reagan's presidency, from 1981 to 1989, was defined by sweeping tax cuts, financial deregulation, and a robust anti-communist stance. His economic programme, dubbed 'Reaganomics', slashed top income tax rates from 70% to 28% and spurred a period of growth that reduced US unemployment from 7.5% to 5.3% by 1988. These policies closely mirrored those of his close ally, Prime Minister Margaret Thatcher, who implemented similar reforms in the UK during the same period.
The Reagan-Thatcher partnership reshaped global finance, encouraging privatisation and reducing state intervention. For UK households, this legacy translated into lower mortgage rates and a booming stock market in the 1980s, though critics argue it also widened income inequality. The FTSE 100, which launched in 1984, rose from 1,000 points to over 2,000 during Reagan's tenure, reflecting investor confidence in deregulated markets.
At the Bank of England, policymakers have long studied Reagan's supply-side economics, particularly his approach to inflation control. After the UK's own battle with double-digit inflation in the late 1970s, the Bank adopted inflation targeting in 1992, a framework that remains central to monetary policy today. Reagan's death in 2004 came as the UK economy was enjoying a period of steady growth, with interest rates at 4.5% and inflation around 1.6%.
For today's UK readers, Reagan's legacy is still felt in debates over tax policy and government spending. His emphasis on low taxes and limited regulation continues to influence Conservative Party platforms, while Labour figures often point to the social costs of deregulation. The former president's death also served as a reminder of the deep ties between Washington and London, ties that underpin trade agreements and financial flows worth billions of pounds annually.
Source: Eliot Wilson