To walk down narrow, curving Fleet Street on a morning when the rains of winter are yielding to the balm of spring is to see the traditional London of everyone's dreams.

The superb dome of St. Paul's Cathedral, soon to be the scene of the biggest royal wedding in Britain since the Queen's in 1947, rises majestically on the skyline above Ludgate Circus, above red buses and black taxicabs, above hurrying throngs of office workers, above fresh window boxes splashing the gray granite of the Daily Telegraph building and Barclay's Bank opposite with the bright, bobbing yellow of daffodils and the red and blue of hyacinths galore.

A blue Rolls-Royce eases into the curb. A white Mercedes 450 noses past it. No outward sign of recession or decline here.

Yet, increasingly, London and the prosperous southeast corner of England have become islands of affluence in the United Kingdom as a whole. Any assessment of the national mood at the end of the second year of Margaret Thatcher's conservative government must look north and west as well.

On the phone from industrial Manchester, hard hit by unemployment, the failure of traditional industry, and limited public spending, a businessman reports: "Indeed, the outlook is not good. Businesses are closing all the time. Fewer businesses mean less business for the rest of us who service them. One doesn't despair, but it's not easy."

That last piece of typical British understatement only hints at national unemployment, now running at above 2.4 million. The country has been losing around 5,000 jobs every week. the budget just brought down in a sober and at times angry House of Commons chamber at Westminster assumes unemployment rising to 3 million by 1982 and staying there until about 1984, the year Mrs. Thatcher must again fight a general election.

Chancellor of the Exchequer Sir Geoffrey Howe conceded in his budget speech that companies were at long last tackling the deep-seated weaknesses of high inflation, low output, and one other vital factor that strikes the newcomer to Britain with force: an unwillingness to accept quick and radical change.

"But the immediate effect," he said, "has been to add to unemployment. Thus, nearly 300,000 jobs have been lost in the motor industry, steel, textiles, and shipbuilding over the past 18 months."

Vivid scenes around the country illustrate his words:

In Coventry in the midlands, once a symbol of British car production and postwar success, machinery lies silent. Factories echo emptily. Car parks are deserted. Almost 1 in 10 of the 180,000 jobs remaining in the city have been lost in the last year. Total unemployment is above 13 percent (against 10 percent for the country).

Even Rolls-Royce is eliminating 650 jobs in its two Coventry factories.

In Sunderland, on the River Wear in the far north of England, the days of world leadership in shipbuilding have vanished. Even new government-financed factories are closing down.

Unemployment is 20 percent. Twenty-five percent of those left at work depend on public spending, which Mrs. Thatcher is determined to cut, though she has had only limited success so far.

Much closer to London -- about 20 miles north in Stevenage new town, Hertfordshire -- signs are ominous. Planned from the ground up in the 1950s as a model place for business and industry, it has just seen ICI (chemicals) and Bowater (corrugated board) close. Kodak is leaving. A Financial Times report said that, as elsewhere these days, traditional industry using lots of labor was failing, slowly replaced by high technology and service industries.

The number of people out of work in Scotland, Northern Ireland, and Wales remains much higher than the rest of the country.

What emerges is a Britain sharply divided not only by class, but between those still in work -- said to be a higher number than in any European country except Denmark --and those who are not (the number is growing more slowly now than last year, but still grows nonetheless).

For those still working, life has smiled: inflation has dropped sharply from 22 percent a year ago to 13 percent now and only 7 1/2 percent over the last six months. Real incomes have risen. Living standards have gone up 2 percent on balance.

More British people than ever before own central heating, telephones, cars, and refrigerators. The pound sterling, strong abroad last year, made imports cheaper. The affluent had a wider range of items to buy, from German cars to French perfume.

Pay, in fact, has been rising much too fast here; workers have produced very little more than before with which to finance the raises. After paying taxes, workers in Britain now have about 17 percent more to spend than in 1977. But productivity has gone up a mere 2 percent.

The number of those without work has zoomed by 1 million people in the past 12 months alone, bringing with it personal hardships and tragedies, despite a number of "cushions." The cushions include high welfare benefits, a large number of households where at least one member is working, and vast amounts of part-time work in the 'black economy' (income not declared and thus not taxed).

Britain is by no means alone in Europe. Six out of seven of the major industrial countries saw sharp drops in output in mid-1980. Average inflation in countries covered by the Organization for Economic Cooperation and Development in Paris remains in double figures. Gaston Thron, president of the Commission of the European Communities in Brussels, has just told the European Parliament that the economic future of the European Common Market has never looked gloomier.

British problems are particularly bad: ancient industrial equipment, high labor costs, restrictive trade unions, slowness to change, inflation, the cleavage of class, unemployment, people still tending to live in one place rather than to roam around looking for new opportunities.

Yet, all that said, a remarkable feature of British life in general is that there is not more unrest, not more political protest, not more rioting.

Polls by the Henley Center of Forecasting in the first half of February (before the latest budget came out March 10) showed the young (hard hit by the lack of jobs as they leave school) and the poor unhappiest. But a remarkable 81 percent of those questioned answered the question "Are you relatively contented with your lot?" by saying "yes."

Only 17 percent said "no" (though, again, that percentage rose in the southwest, Wales, and among the poor), 63 percent agreed that class distinctions were the basic problem.

Another striking sign: Asked if they felt a need to own more things (consumer goods), only 39 percent said "yes" --and 58 percent said "no." Even among those aged 16 to 24, a mere 55 percent said "yes."

Which brings us to the political meaning of it all. 6

Fire in her eye and voice, Prime Minister Thatcher has swung to the attack against the many critics in her own party (and in industry, labor, banking, oil, and elsewhere) who insist her latest budget was much too harsh. The very emotion of her words shows the pressure she is under, even inside her own Cabinet, to tax individuals less and to stimulate private industry more.

Still two years away from the next mandatory election, she faces, ironically enough, her main threat from her own supporters rather than from the Labour Party opposite her in the dark, green-cushioned, wood-paneled house of Commons chamber.

The Labour Party is riven with dissent and tumult.The far left, led by energetic grass-roots Trotskyites, have seized the strings of power. Moderates are on the run -- and a new center party has split off amid the intensest publicity.

Said the establishment figure who edited the London Times for the past 14 years, William Rees-Mogg (he retired March 6) in a long reflective interview with this correspondent:

"A great number of people are dissatisfied with Labour and many with the Conservatives. Both have had their chance to put things right. Instead, things are worse. I think the time has come for the new center party, and I think Shirley Williams could well be the next prime minister.'

I was surprised at the strength of his endorsement. When I sat down later with the immensely likeable and highly intelligent Mrs. Williams (a former minister of prices, and of education, in Labour governments and one of the best-known faces in Britain today, she reached down behind her desk and pulled out 20 of the thousands of letters she has receive since she, with former Foreign Secretary David Owen, former Transport Minister William Rodgers, and former Home Secretary and Chancellor of the Exchequer Roy Jenkins (the "gang of four"), decided to split from Labour and form a new Social Democratic Party.

"Read those," she said with a smile. "They'll tell you what people think. I cannot use individual names, but after going through the stack, I can say that from Lancashire, from South Shields, from Essex, from Staffordshire, from Suffolk, from Wiltshire, from Dundee, Birmingham, Liverpool, Bradrod, hereford, and more, people said they were fed up with traditional politics and wanted Mrs. Williams's own brand of center-left social democracy.

Trim, neat, and decisive, she says the new movement has received about 25,000 messages and a fair amount of money so far. She is buoyed by the support, though she does worry that the two main parties might in time move back toward the center and squeeze the new group out.

Certainly the March 10 budget has increased public unhappiness with Mrs. Thatcher (44 cents more for a gallon of petrol, $2.2 billion a year in revenue from higher alcohol and tobacco prices, even new fares on motorscooters and matches).

The Henley Poll findings showed a full 62 percent of people saying the country was not well governed, and 26 percent saying it was. Among the poor and the jobless, 70 percent thought the country was poorly run.

and in a figure which must worry the ruling conservatives, half of the top income and social levels believed the same: poor government. Of the total sample, only 16 percent thought politicians were in touch with the people.

The press, radio, and television here remain preoccupied with clashes and controversy between government, bosses, and unionists. Even top civil service "boffins" as they are called, sometimes earning more than $50,000 a year, helped launch selective strikes to protest against a government pay offer of 7 percent.

The verdict on the Thatcher years is not yet in. England remains a remarkably and reassuringly civilized place in which to live.Outside the cities, the green and bordered fields are gentle.

Tolerance and civility among and between people are generally high, despite the class system, and the country is a wellspring of new ideas, banking and financial skills, pomp and ceremony (as the wedding of Prince Charles and Lady diana Spencer will demonstrate anew), tradition and sanity.

Compared with New York or Los Angeles, or with Hamburg or Marseilles, London's crime rate looks manageable. Theater, ballet, art, music all remain at world standards despite budgetary cutbacks.

Yet basic changes lie ahead. The country must find new jobs in service industries and in tending superefficient machines, just as the United States has had to do.

It won't be easy. But the dome of St. Paul's continues to attest to a rich and innovative past. Many people around the world who have drawn sustenance from that past hope and pray that Britain will eventually find its way to a new future.

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