Mrs. Thatcher sends signals of flexibility, but not a basic shift, in policy

In trains, buses, homes, shops, pubs, clubs, and boardrooms, concern about the British economy spills over into daily debate -- and Prime Minister Margaret Thatcher is shifting emphasis as a result.

She is not altering basic course, she insists. But in subtle ways, as her government prepares to make crucial budget cuts March 10, she is sending signals to a worried couple that she is prepared to allow some flexibility.

"If I was 20 years younger, I'd emigrate," grumbles a blue-suited businessman on a commuter train from Waterloo. "But it's too late now." He went back to gloomy headlines in his newspaper. "People just aren't taking cabs like they used to," said the driver of one of London's famous square black Austins.

"Do you realize," demanded another Londoner, "that we pay more for energy than any other major country in Europe?"

"I agree with Mrs. Thatcher, generally," said a businessman, "but I only wish she could show more warmth, more compassion." This is a common feeling.

Mrs. Thatcher is still convinced she is right in trying to bring down the rate of inflation and hold down government spending despite the enormous figure of 2.42 million unemployed, the highest total in 45 years.

But in recent days she:

* Changed her phrasing during a television interview to suggest that interest rates might be about to fall. The minimum lending rate stands at 14 percent, but if the average Briton wants to repair his home or borrow for other reasons, he is still likely to pay 20 percent or more to the bank. Mrs. Thatcher brought the lending rate down from 16 percent late last year; another fall would be big news indeed.

Even Mrs. Thatcher's hint was enough to weaken the exchange rate of the pound sterling. It is Britain's high interest rates that keep attracting foreign money and thus help float the pound high on an exchange rate that otherwise seems ill-matched to the actual state of the economy.

* Granted the opposition Labour Party a debate in the House of Commons Feb 6. Opposition leader Michael Foot had long sought a debate: Mrs. Thatcher had long fended him off. The Conservative government is secure in office for the moment, with a comfortable majority, and the opposition is torn asunder by internal wrangling between its left and moderate wings. But the prime minister is thought to have decided to clear the air a little -- and is widely believed to be ready to announce an interest-rate fall.

* Taken several intriguing moves toward the nationalized industries that challenge any British government.

Mrs. Thatcher doesn't like nationalization, and she has said she certainly doesn't approve of the way the government has had to prop up the ailing auto giant BL (British Leyland) and its seemingly endless losses and labor disputes.

But she has just approved government financial aid of L990 million ($2.36 billion) for the next two years, arguing (reluctantly) that the company had done "just enough" in 1980 in cutting back overmanning, and launching the successful new Mini Metro car.

Industry Secretary Sir Keith Joseph concluded that if BL had been allowed to fold, the country would have lost 150,000 jobs. The cost of paying workers off and closing plants would have been even bigger than the aid granted. Either way , "The taxpayer would have been clobbered," Sir Keith said.

The government is also said to be planning an even bigger aid package, worth L3.5 billion ($8.33 billion), to British Steel. "The issue," says a senior government official privately, "is whether a major industrial state can afford not to have its own independent steelmaking capacity. We don't think Britain can afford to lose the one it has."

* Decided that one nationalized industry that runs a profit, British Telecom, will be allowed to borrow more than the usual government limits by asking for ministerial approval in advance. Usually, nationalized industries must restrict their borrowing to the state-controlled national loans fund.

Meanwhile, Mrs. Thatcher is trying to hold down wage rises for government workers to 6 percent -- but faces a sharp test in negotiations with a range of workers.

The nation's 32,000 water and sewerage workers bluntly rejected an offer of 7 .9 percent and voted to strike. The national water council came back with an offer of 10 percent, higher than the government would have liked, raising wages to L119.41 ($284.20) a week. The unions said they would consider it.

Talks with gas workers had already raised the informal standard for raises this winter to 9.9 percent. British miners have achieved 13 percent. Inflation is running at around 15 percent. National public health service staff have rejected 6 percent. Unions representing a half-million white-collar civil servants are said to be asking for 15 to 20 percent.

In advance of budget day, the Trades Union Congress has demanded that Mrs. Thatcher pump L6.2 billion ($14.76 billion) more into the economy to create jobs. The Confederation of British Industry wants about L1.3 billion ($3.094 billion), lower interest rates, a lower sterling exchange rate, and an end to a 2 percent payroll surtax.

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