 Callaghan succeeded Harold Wilson as the Labour prime minister after the latter's surprise resignation in April 1976.By March 1977 Labour had become a minority government after several by-election defeats, and from March 1977 to August 1978 Callaghan governed by an agreement with the Liberal Party through the Lib–Lab pact.Callaghan had considered calling an election in the autumn of 1978, but ultimately decided that imminent tax cuts, and a possible economic upturn in 1979, could favour his party at the polls by calling one later.