Mrs Thatcher, not one for sleeping much to begin with, had nevertheless been awoken with the news. HMS Invincible had been hit by at least three Exocet missiles, and was sinking. Casualties were lighter than expected, but the captain had given the abandon ship order. The prime minister, after ensuring that all possible aid was given to the escaping survivors, addressed the question her assembled military and political staff waited for. Could they still retake the islands? Admiral Woodward was blunt. Air cover was vital, and with Invincible lost, HMS Hermes was now the sole provider of air cover, and the Argentinians knew it too. The entire enemy air force, he said, would be tasked with sinking the Hermes. That was easier said than done, given the range problems the Argentine Air Force had, having to fly from the mainland, but it meant that the closer the Hermes was to the Falklands themselves, to provide air support for ground forces, the greater the risk was that it could be hit.
Woodward also pointed out the effect the sinking of the Invincible would have on the morale of both sides, and that it would play a significant role. He was right. The following morning, despite D Notices being issued to all British newspapers, the Sun and the Mirror both ran with screen grabs from an American TV crew in a chartered plane who had footage of the ship’s last moments before it slipped beneath. The Sun declared “You Argy Bastards!” whilst the Mirror went with the more restrained “Revenge now!” The country swung solidly behind the prime minister, but then, it did not know what she knew. She had a choice. Risk the Hermes in close support, the loss of which would mean the end of the campaign, or risk soldiers lives without air support. Her political advisers were clear. Parliament would not wear the loss of the Hermes, and she would be gone by the end of the day. They advocated a landing without full air support.
The military objected strongly, with the head of the army threatening to resign in a red-faced heated exchange with a political advisor where he refused to put British soldiers into unnecessary danger to save a politician’s blushes. Mrs Thatcher, in a moment of honour that even her most ardent opponents recognised as an act of nobility, assured the general that she would never give such an order. She then instructed her foreign secretary to contact the Americans to act as go-betweens.
US Secretary of State Alexander Haig quickly negotiated a ceasefire, and within three weeks US helicopters were landing in the Falklands to evacuate any Falkland Islanders who wished to be evacuated from the conflict zone. The talks in Washington quickly settled on the concept of Britain conceding shared sovereignty of the islands in return for an Argentine withdrawal. When Mrs Thatcher visited the White House to make it clear to President Reagan that such an option was not acceptable, the president diplomatically informed her that she had no choice. Argentina was the force on the ground and she was negotiating from a position of weakness. She then requested US military assistance to change that fact. When President Reagan refused, she departed, and never spoke to him again for the rest of his life.
With the task force limping back to Portsmouth, the polls, which previous to the invasion had the newly formed centrist Social Democratic Party with over 50%, and the Tories in third place, opened up even wider. The prime minister delayed the general election until May 1984, but the desperate economic news and the humiliation of the Falklands led to her being christened “The Jimmy Carter of British Politics” by Liberal leader David Steel, and the voters seemed to agree, handing a huge majority to the SDP-Liberal Alliance with just under 48% of the vote. Labour suffered losses too, but the real casualties were the Conservative Party, who stumbled back into Parliament with less than 50 seats, Mrs Thatcher losing her own seat in Finchley by 234 votes.
Roy Jenkins, the former Labour Chancellor and President of the European Commission, and now prime minister, moved quickly to take advantage of the momentum of his historic win. Bills on constitutional reform, including changing the voting system, were quickly passed through the Commons, with the House of Lords, despite having only a tiny minority of SDP and Liberal peers, afraid to block a government which such a huge mandate. Jenkins also surprised many by making trades union reform a centrepiece of his government, although looking to Germany for inspiration. The new legislation swept away many of the old restrictive practices whilst putting in place generous profit sharing arrangements for employees, and tax incentives for the companies that signed up to them. The Jenkins government radically changed the approach of the government to industry and manufacturing, investing state money in companies willing to take the long term view, whilst pushing in the EEC for a dismantling of barriers to a European single market.
Jenkins then lobbied for, and succeeded in the appointment of a British President of the European Commission to take a tough approach to this agenda. European history books written years later credited the beginning of the final phase of European integration, a real single market, with the ten year European Commission led by President Thatcher.