Peter Jay, the former economics editor for the BBC, passed away at the age of 87, a significant figure in economic journalism who previously served as Britain’s ambassador to Washington during the late 1970s.

His appointment to the prestigious ambassadorial position was surprising, especially since he was a non-diplomat. This was attributed to Jay’s father-in-law being James Callaghan, who was the Labour prime minister at the time. Callaghan maintained that the decision was made by David Owen, the foreign secretary, with the belief that the Jay family would effortlessly engage with Washington’s elite. This was not the case, as history shows the relationship was soon strained.

Jay’s most consequential economic contributions during his tenure in the 1970s as economics editor were at risk of being overlooked. At that time, Tim Congdon emerged as one of Britain’s leading monetarist economists and credited Jay with igniting his interest in the connection between monetary policy and inflation.

In his writings, Congdon reflected on his experiences at The Times, citing Jay’s warnings about the rapid monetary growth observed in 1972 and early 1973, predicting it would lead to significant inflation. He noted Jay’s effectiveness in opposing the lax economic policies promoted by Anthony Barber, the Conservative Chancellor of the Exchequer. Jay’s forecasts were ultimately validated when inflation surged past 25 percent by late 1975, mirroring earlier monetary trends.

As the economics editor, Jay’s insights, shared with contemporaries like Sam Brittan of the Financial Times, highlighted the diminishing credibility of the postwar Keynesian framework embraced by both political parties, including his father Douglas Jay, a Labour minister.

One pivotal moment occurred when Callaghan sought Jay’s assistance for a speech at the 1976 Labour conference while the government faced challenging negotiations with the International Monetary Fund. Unions were pressuring for unemployment relief during this tumultuous period.

In this speech, as Callaghan delivered Jay’s words, he expressed the realities of economic policy: the era of guaranteed full employment by simple fiscal measures was over. He articulated a shift in thinking about economic recovery where spending to alleviate recession would only lead to higher inflation and increased unemployment rates.

In this historic address, Jay set the stage for economic thought and policy well into the next 50 years, providing a framework that would influence various policymakers, including Rachel Reeves.

Margaret Thatcher’s government in 1979 initially adopted monetarist principles influenced by Jay’s work; however, in an interview, Jay found her understanding of these principles to be lacking. Despite the foundational ideas of monetarism, which included the notion of a ‘natural rate’ of unemployment, Thatcher distanced herself from such doctrines.

Although my interactions with Jay were brief during my time at a now-defunct financial publication, I found him to be both approachable and insightful in our exchanges. He shared anecdotes regarding the conceptualization of recession definitions by economists like Arthur Okun during the Lyndon Johnson administration, highlighting the nuanced relationship between political decision-making and economic indicators.

As BBC economics editor, Jay endeavored to demystify complex economic concepts for the public, such as the ‘output gap,’ contributing significantly to the public’s understanding of economic conditions and policy implications.