2 January – Workers at British Steel go on a nationwide strike over pay called by the Iron and Steel Trades Confederation, which has some 90,000 members among British Steel's 150,000 workforce, in a bid to get a 20% rise. It is the first steelworks strike since 1926.
Manchester United chairman Louis Edwards dies from a heart attack at the age of 65, just weeks after allegations about his dealings with Manchester United and his retail outlet chain.
10 March – An opinion poll conducted by the Evening Standard suggests that six out of 10 Britons are dissatisfied with Margaret Thatcher's Conservative government, who now trail Labour (still led by James Callaghan, the former prime minister) in the opinion polls.
20 March – Radio Caroline, the pirate radio station, was forced to cease transmission when the ship on which it was based sunk.
10 April – The UK reaches agreement with Spain to re-open its border with Gibraltar.
18 April – Zimbabwe becomes independent of the United Kingdom.
22 April – Unemployment stands at 1,500,000 – the highest in two years.
30 April – The Iranian Embassy Siege begins. A six-man terrorist team calling itself the "Democratic Revolutionary Movement for the Liberation of Arabistan" (DRMLA) captures the Embassy of Iran in Prince's Gate, Knightsbridge, central London, taking 26 hostages.
27 May – Inquest into the death of New Zealand born teacher Blair Peach (who was killed during a demonstration against the National Front last year) returns a verdict of misadventure, resulting in a public outcry.
British Leyland launches its Morris Ital range of family saloons and estates, which are a reworking of the nine-year-old Marina that was one of Britain's most popular cars during the 1970s. It will be produced for up to four years until an all-new front-wheel drive model is launched, and sales begin on 1 August – the same day that the new W-registered cars go on sale.
6 June – Two Malaysian men are jailed for 14 years after being found guilty of running a drug smuggling ring in London which generated millions of pounds.
12 June – Gail Kinchen (a pregnant 16-year-old) and her unborn baby are accidentally shot dead by a police marksman who entered the Birmingham flat where her boyfriend David Pagett is holding her hostage at gunpoint.
22 July – Unemployment has hit a 44-year high of nearly 1,900,000.
29 July – Prime Minister Margaret Thatcher announces the introduction of Enterprise Zones as an employment relief effort in some of regions of Britain which have been hardest hit by deindustrialisation and unemployment.
Undated: Britain is now in recession for the second time in five years following two successive quarters of economic contraction, which worsened from 0.9% in the first quarter of the year to 1.8% in the second quarter.
11 August – Margaret Thatcher visits the Harold Hill area of East London to hand of the keys to the 12,000th council tenants in Britain to buy their home under the right to buy scheme. However, she is met by jeering from neighbours of the family.
15 August – 37 people die as a result of fires started by arson at adjacent London nightclubs.
28 August – Unemployment has increased to more than 2,000,000 – the highest since 1935. Economists warn that it could rise to up to 2,500,000 by the end of next year.
1 September – Ford launches one of the most important new cars of the year – the mark 3 Escort, which is a technological innovation in the small family car market, spelling the end of the traditional rear-wheel drive saloon in favour of the front-wheel drive hatchback. An estate version is also available.
11 September- The Marlborough diamond is stolen in London.
12 September – Marlborough diamond thieves Joseph Scalise and Arthur Rachel are arrested in Chicago after getting off a British Airways flight in the city. However, the stolen diamond has not been found.
8 October – British Leyland launches the Austin Metro, a small hatchback which uses much of the Mini's mechanical design but an entirely different body which offers more space and practicality. Production of the 21-year-old Mini, however, is set to continue for the foreseeable future, although it is expected to be scaled back along with that of the larger Austin Allegro.
10 October – Margaret Thatcher makes her famous "The lady's not for turning" speech to the Conservative Party conference after party MP's warn that her economic policy was responsible for the current recession and rising unemployment.
James Callaghan, ousted as prime minister by the Conservative victory 17 months ago, resigns as Labour Party leader after four and a half years.
Former prime minister Harold Macmillan, 86, criticises Margaret Thatcher's economic policies, claiming that she has "got the wrong answer" to the economic crises which she inherited from Labour last year. Her economic policies are also criticised by union leaders, who blame her policies for rising unemployment and bankruptcies, and warn that this could result in civil unrest.
17 October – Elizabeth II makes history by becoming the first British monarch to make a state visit to the Vatican.
13 November – George Smith, a security guard, is shot dead when the van he is guarding is intercepted by armed robbers in Willenhall, West Midlands.
17 November – University student Jacqueline Hill, aged 20, is murdered in Headingley, Leeds.
19 November – Police investigating the murder of Jacqueline Hill establish that she was probably the 13th woman to be killed by the Yorkshire Ripper.
23 November – Despite the economy now being in recession and the government's monetarist economic policy to tackle inflation being blamed for the downturn, the government announces further public spending cuts and taxation rises.