Callaghan, KAL uh huhn, James (1912-2005), served as prime minister of the United Kingdom from 1976 to 1979. He succeeded Harold Wilson as prime minister and Labour Party leader after Wilson resigned. During Callaghan's term as prime minister, Britain faced inflation and major labor strikes. In 1979, the Conservative Party defeated the Labour Party in a general parliamentary election, and Conservative Party leader Margaret Thatcher replaced Callaghan as prime minister. Callaghan resigned as leader of the Labour Party in 1980.