Peggy starts dating businessman George Palmer (Paul Moriarty), unaware that he is a gangster involved in illegal money laundering. She also instigates a hate campaign against local resident Mark Fowler (Todd Carty) when she discovers he is HIV positive, and in doing so clashes with his mother Pauline (Wendy Richard) on several occasions. Peggy later realises she was wrong when she is diagnosed with breast cancer. She initially refuses surgery and ends things with George, fearing that he will not be able to handle her illness. However, supported by George and her family, she eventually has a lumpectomy. Peggy and George get engaged but their relationship ends when Phil reveals his illicit activities. Peggy goes on to date local car lot owner, Frank Butcher (Mike Reid), and they become engaged. Peggy has doubts about the wedding when her cancer returns and she has to have a mastectomy, but eventually decides to go through with it. Tension soon develops between Peggy and Phil when Grant leaves for Rio de Janeiro after a violent fight with his brother. To spite Peggy, Phil sells Grant's share in the pub to his business partner Dan Sullivan (Craig Fairbrass) for £5. The result of this causes Peggy to loathes Dan, and the two frequently argue over the running of The Queen Vic. At one point, Frank gets involved and punches Dan after the latter insults Frank's stepdaughter Janine (Charlie Brooks). Eventually, she and Phil call a truce and force Dan out of Walford. Peggy discovers Frank is planning to leave her for his ex-wife, Pat Evans (Pam St Clement), so she shames them by reading Frank's Dear Jane letter to the entire pub and then slaps them both. She throws Frank out and he leaves Walford. Afterwards, Peggy becomes depressed and begins to rely heavily on tranquilizers. When Janine taunts her on Christmas Day about her father moving on, Peggy begins drinking heavily and smashes up the pub with a baseball bat. The next year, Peggy is forced to sell the pub as Frank left her in debt, and is furious to discover the new owner is Sharon.