Prime Minister Margaret Thatcher says her monetarist policies are beginning to produce significant signs of long-term improvements for Britain's battered economy, despite the country's current severe recession.
But she added that her government's confidence and determination could be dangerously eroded by its sharp fall in public opinion polls, British media preoccupation with bad economic news, her ministers' failure to accentuate the positive and damage done by a few ministers who publicly disagreed with her policies or leaked details of dissension within her Cabinet.
This underlies a spate of optimistic New York statements by Thatcher and some of her senior ministers during the past week and Monday's unexpected reshuffle of part of her Cabinet.
Thatcher urged a group of interviewers from Britain's television and radio networks to pay more attention to economic indicators that are "going the right way." She pointed out that "inflation is falling quite fast. Interest rates are coming down. Exports have held up remarkably well.
"Wage claims are much more realistic compared to output," she added. "Attitudes are changing. People are becoming more competitive. Managers are beginning to manage."
Similar "favorable signs as we go into 1981," despite still falling industrial output and rapidly rising unemployment, also were emphasized this week by senior Cabinet member Francis Pym, whom Thatcher moved from defense secretary to become leader of the House of Commons and government information chief. Thatcher asked him to coordinate an aggressive good-news campaign and win back doubters among Conservative Party backbenchers in Parliament.
She also sent an unmistakable message to dissenters within her Cabinet by firing as leader of the House of Commons Norman St. John-Stevas, whose concern about the harshness and social divisiveness of Thatcher's survival-of-the-fittest policies had surfaced in both public utterances and private asides.
Thatcher said yesterday the Cabinet reshuffle, which also put more of her staunch supporters in key positions, "gives the government a new momentum, new dynamic. It reaffirms the direction in which we are going."
She also acknowledged her concern about leaks of disagreements over her economic policies in closed-door Cabinet discussions. "It shouldn't happen in any government," she said. "I hope it will happen less and less. I think people are very much aware of the damage it has done.
"Cabinet government consists in coming to a decision by discussion. What you shouldn't ever do is say, 'All Right, I'll go along with it inside Cabinet provided outside I can say I don't agree'. That is not Cabinet government and will weaken any government. We've had one or two problems. I hope we're through those."
St. John-Stevas angrily demanded today that Thatcher say she was not referring to him. While as Commons leader he regularly gave background briefings in which he provided the press "guidance on government policy," he said he never gave away Cabinet secrets or revealed Cabinet discussions. Other knowledgeable sources said the leaks that disturbed Thatcher came from other dissenters in the Cabinet.
"I am perfectly prepared to lose my job," St. John-Stevas said. "But I am not prepared to lose my reputation for integrity and truthfulness."
Thatcher quickly responded in an exchange of letters by telling St. John-Stevas, "Let me make it absolutely clear that nothing I said was meant to suggest that I thought you were responsible for the leaks of Cabinet discussions which, very regrettably, have occurred from time to time over the past months."
While stressing that Thatcher has not even privately blamed St. John-Stevas for the Cabinet leaks, informed sources added that St. John-Stevas was known within the government for other gossipy, often bitingly witty "indiscretions," some of which St. John-Stevas claims have been wrong attributed to him.
These sources also emphasized that Pym, who was moved from the Defense Minister after clashing with Thatcher's treasury officials over defense budget cuts and reportedly threatening to resign, has in his new job been given considerable new responsibility and returned to his parliamentary power base. Some sources suggested this actually could strengthen Pym's potential as an alternative to Thatcher as party leader and prime minister if her economic policies put the Conservatives into too much political jeopardy before the next national election in 1983 or 1984.