Britain's 'iron lady' polishes her image for general election expected next year

As Prime Minister Margaret Thatcher prepares to fight a general election next year she is keeping two key aspects of her public image intact: as an ''iron lady'' in dealing with communists and unrepentant ''parlor economist'' at home.

At the annual Lord Mayor's banquet in London's Guildhall last week she signaled the new Russian leadership that before there could be negotiations, there had to be signs of flexibility and goodwill. ''Any such evidence will be met with a ready welcome,'' she said. But she added that she could not forget events in Poland and Afghanistan, or the Berlin Wall.

Speaking of domestic politics, she defended herself against charges that her approach to economic questions is simplistic: ''Some say I preach merely the homilies of housekeeping or the parables of the parlor. But I do not repent. Those parables would have saved many a financier from failure and many a country from crisis.''

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