Thatcher's first four years as prime minister had not been an easy time. Unemployment increased during the first three years of her term and the economy went through a recession. However, the British victory in the Falklands War led to a recovery of her popularity; the economy had also returned to growth. By the time Thatcher called the election in May 1983, the Conservatives were most people's firm favourites to win the election. The Labour Party had been led by Michael Foot since the resignation of James Callaghan. They had fared well in opinion polls and local elections during this time, but issues developed which would lead directly to their defeat. Labour adopted a platform that was considered more left-wing than usual. Several moderate Labour MPs had left the party to form the Social Democrats. The Social Democrats then formed the SDP-Liberal Alliance with the existing Liberal Party.
The opposition vote split almost evenly between the SDP/Liberal Alliance and Labour. With its worst performance since 1918, the Labour vote fell by over 3 million from 1979 and this accounted for both a national swing of almost 4% towards the Conservatives and their larger parliamentary majority of 144, even though the Conservatives' total vote fell by almost 700,000. This was the most recent election where a party in government increased its majority until 2015.
The SDP/Liberal Alliance finished in third place but came within 700,000 votes to out-polling Labour. By gaining 25% of the popular vote, the Alliance won the largest such percentage for any third party since the 1923 general election. Despite this, they won only 23 seats, whereas Labour won 209. The Liberals argued that a proportional electoral system would have given them a more representative number of MPs. Changing the electoral system had been a long-running Liberal Party campaign plank and would later be adopted by the Liberal Democrats.
The campaign displayed the huge divisions between the two major parties. Thatcher had been extremely unpopular during her first two years in office until the swift and decisive victory in the Falklands War, coupled with an improving economy, considerably raised her standings in the polls. The Conservatives' key issues included employment, economic growth, and defence. Labour's campaign manifesto involved leaving the European Economic Community, abolishing the House of Lords, abandoning the United Kingdom's nuclear deterrent by cancelling Trident and removing cruise missiles — a policy programme dubbed by Labour MP Gerald Kaufman as "the longest suicide note in history". "Although, at barely 37 pages, it only seemed interminable", noted Roy Hattersley. Pro-Labour political journalist Michael White, writing in The Guardian, commented, "There was something magnificently brave about Michael Foot's campaign — but it was like the Battle of the Somme."
Following boundary changes in 1983, the BBC and ITN (Independent Television News) co-produced a calculation of how the 1979 general election would have gone if fought on the new 1983 boundaries. The following table shows the effects of the boundary changes on the House of Commons:
The election saw a landslide victory for the Conservatives, achieving their best results since 1959. Although there was a slight drop in their share of the vote, they made significant gains at the expense of Labour. The night was a disaster for the Labour party; their share of the vote fell by over 9%, which meant they were only 700,000 votes ahead of the newly formed 3rd party the SDP-Liberal Alliance. The massive increase of support for the Alliance at the expense of Labour meant that, in many seats, the collapse in the Labour vote allowed the Conservatives to win. Despite winning over 25% of the national vote, however, the Alliance got less than 4% of seats - 186 fewer than Labour.
The most significant Labour loss of the night was Tony Benn, who was defeated in the revived Bristol East seat. SDP President Shirley Williams, then a prominent leader in the Social Democratic Party, lost her Crosby seat which she had won in a by-election in 1981. Bill Rodgers, another leading figure in the Alliance (like Williams, one of the "Gang of Four") also failed to win his old seat that he previously held as a Labour MP.
This election was fought under revised boundaries. The changes reflect those comparing to the notional results on the new boundaries. One significant change was the increase in the number of seats allocated to Northern Ireland from 12 to 17.