Mrs Thatcher's decisive and determined stand during the Falklands crisis in 1982 has been widely credited with restoring the electoral fortunes of the Conservative party in the run-up to the 1983 general election. This article argues that the Falklands war produced a boost to Conservative popularity of at most three percentage points for a period of only three months. Government popularity was already accelerating as a result of macroeconomic factors before the outbreak of the Falklands crisis, in particular ‘personal economic expectations’ proved to be of critical theoretical and empirical significance, and can be modelled satisfactorily on the basis purely of objective macroeconomic indices. Thus macroeconomic factors were at the root of the revival of Mrs Thatcher's political fortunes, and most of the boost to government popularity which occurred in the spring of 1982 derived from intelligent (or cynical) macroeconomic management. The Falklands crisis merely coincided with a jump in government popularity which would have occurred anyway in the wake of Geoffrey Howe's 1982 Budget.