LONDON — PRIME Minister Margaret Thatcher's unexpected decision to take Britain into the exchange-rate mechanism of the European Monetary System raises the strong likelihood of a general election being held as early as June next year. That is the consensus of leading political analysts, following the British leader's sudden agreement to drop resistance to a move that close advisers had been urging on her for the past five years.
By agreeing to peg the British pound to the value of other leading European currencies, Mrs. Thatcher has taken a large step down the road to European economic and monetary integration. She has also opted for a policy that she hopes will lower inflation, rescue the British economy from recession, and persuade voters to give her ruling Conservative Party a fourth five-year term in government.
The latest a British general election can be held is before mid- 1992, but prime ministers are free to decide on ``snap'' elections at any time. This is usually done to cause maximum problems for political opponents. June and October next year are frequently mentioned as the times Thatcher will choose.
Gavin Davies, chief economist of the London merchant bankers Goldman Sachs, says joining the exchange rate mechanism (ERM) signals a determination to confront inflation, now running at close to 11 percent - roughly twice as high as the European average.
Thatcher accompanied entry into the ERM, which formally took effect yesterday, with a 1 percent cut in interest rates from the 15 percent level of the past 12 months. This swiftly boosted the pound's value on the world's currency markets.
``She is launching a bold attempt to get a grip on an economy that is in serious trouble,'' Mr. Davies said. ``If the strategy works, the likelihood of an early general election must be that much greater.''
Davies added that another cut in interest rates in coming weeks was ``very likely.''
Robin Leigh-Pemberton, governor of the Bank of England, disagreed. He expressed caution over further interest-rate cuts. He would have preferred entry into the ERM to have been ``kept separate'' from lowering interest rates, he said.
Britain's formal joining of the monetary system, which was first devised 11 years ago, came in the midst of a vigorous political season. The move coincided with the first day of the annual Conservative Party conference at Bournemouth.
Chancellor of the Exchequer John Major, who stunned world financial markets with the ERM announcement late on Friday, warned that membership in the system was not an ``automatic panacea'' for Britain's economic difficulties. He said he was not ``trying to produce a pre-election boomlet.'' Manipulating policy was ``unwise economically, unwise socially, and pretty batty politics as well,'' he said.
Thatcher said the decision to join reflected the fact that ``the economy is working the way we intended.'' She added that she had not dropped her opposition to economic and monetary union and a common European currency.
On both issues the British prime minister has opposed Jacques Delors, president of the European Commission, the executive arm of the 12-nation European Community (EC).
Mr. Delors said at the weekend: ``I am worried that Thatcher will continue to oppose the EC's plans for economic and political union. That would be unfortunate.''
Welcoming the decision to link up with the other Europeans in the ERM, Edward Heath, a former Conservative prime minister and long-standing critic of Thatcher, said: ``We are now on the right path. What we have to do is to be constructive and positive and give our European colleagues a lead in pressing ahead to a full European unity.''
Under the arrangement reached with EC states, Britain's pound entered the ERM at a baseline rate of around 2.9 deutsche marks, with fluctuations of 6 percent permitted above or below that figure. It is expected that fluctuations in a much tighter range of 2.25 percent will be agreed on soon.
Before announcing ERM entry, British government sources say, Mr. Major was advised by Treasury officials that inflation could be expected to fall significantly in the next few months. He was also warned, however, that an effect of joining might be to make British exports more expensive, as the pound strengthened on European currency markets.
This led John Smith, the opposition Labour Party's ``shadow'' chancellor, to claim that Thatcher was ``taking a gamble'' with ``obviously political motives.'' He agreed, however, that joining was ``a welcome move.''
With the obvious intention of underlining the political significance of her decision, Thatcher timed the announcement of ERM entry to coincide with the last day of Labour's own party conference, which, up to that point, had been marked by rising confidence that the party would form the next government.
Labour has been advocating early entry into the European Monetary System together with interest cuts, and in this sense Thatcher has stolen some of its thunder.
On the other hand, she has re-opened a debate within the Conservative Party on European policy. Major, Nigel Lawson (Major's predecessor), and Foreign Secretary Douglas Hurd all favor closer political and economic relations with Europe.
Thatcher made it plain at the weekend, however, that joining the ERM did not mean that she had become a European federalist overnight.
She spoke of her ``total opposition'' to the development of a single European currency, which the EC will discuss at an intergovernmental conference in Rome in December.