UK: OUTLOOK FOR THATCHER GRIM

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 06717506
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 6
• Document Creation Date: December 28, 2022
• Document Release Date: February 2, 2018
• Case Number: F-2017-00744
• Publication Date: November 14, 1990

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Director of Central Intelligence
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14 November 1990
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Notes
In Brief
Special Analyses
UK: Outlook for Thatcher Grim 12
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Special Analysis
UK: Outlook for Thatcher Grim
Prime Minister Thatcher's position looks increasingly precarious after
former Deputy Prime Minister Howe's withering attack yesterday,
opening her up to a probable leadership challenge from Michael
Heseltine next Tuesday. If Thatcher survives unscathed and leads the
Conservatives into the next general election, her hostility to EC
integration will remain a serious Tory liability, and the odds are against
the economy recovering sufficiently to help her. The unpopularity of the
government so late in its term portends a tight race.
To the astonishment of the House of Commons, Howe impugned
Thatcher's fitness to govern and accused her of undermining the
UK's international standing with her hostility to European
integration. Press reports indicate Heseltine, Thatcher's major rival,
is on the verr rtf announcing a bid for the party leadership. Howe's
lambasting of I-hatcher puts Heseltine under pressure; he probably
risks losing the support of longtime allies if he does not mount a
challenge, and the deadline for announcing a bid is tomorrow.
Heseltine is still likely to worry that an unsuccessful challenge would
doom his chances in the future; many Tory members of Parliament
would blame him for any electoral damage later.
Tories Deeply Split Over Europe
Howe's recent resignation, one of many Cabinet defections in the past
18 months, is symptomatic of the turmoil in the party over the UK's
ties to Europe. Although a large majoiity of Tory members of
Parliament agree with Thatcher on the EC, close to half favor British
participation in a European central bank, something Thatcher
strongly opposes. Even many who approve of Thatcher's approach
probably fear she is increasingly out of step with the mood of the
public. Although the UK continues to be among the least enthusiastic
EC member nations, Britons nevertheless believe their country's
future, particularly its economic well-being, depends on closer ties to
its EC partners. Despite public apprehension about the EC, recent
polls show a large majority of voters believe that a single European
currency is inevitable within 10 years and that the UK will
participate. Po ular support for a European central bank is even
greater. Li
Opinion surveys show Labor is better positioned than the Tories to
respond to.the public mood. Although it was deeply split in the 1970s
over British entry into the Community, its supporters are now less
hostile to monetary union and more willing to scrap the pound than
are Conservatives. Having criticized the government for its delay in
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Mechanics of a Britiah Leadership Challenge
Any Tory member of Parliament sponsored by two of his colleagues can mount a challenge at
the beginning of a new legislative session. In this case, nominations must be made by
tomorrowbecause a leadership election has already been scheduled for next Tuesday. To win
on the first ballot, Thatcher needs the support of a majority of the 371 Tory members of
Parliament and a margin of at least 15 percent over any other candidate. Some observers arc
speculating, however, that if as many as 100 to 150 abstain or vote against her, she will be so
wounded that she will have to step aside; nominations for a second round would then be
taken. (In a challenge mounted last year by backbencher Sir Anthony Meyer, 60 opposed
Thatcher or abstained.) If no contestant wins an o crall majority on the second ballot,
usually held a week after the first, a final runoff of the top three candidates is held two days
later. In this ballot, an election is ensured by recording both first and second choices; if no
winner emerges immediately, the votes of the third-place candidate are divided between the
others according to the second preference.
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United Kingdom:
Factors Dimming Tories' Electoral Prospects
Party Support Dad* 11 Years of Thatcher
Percent
60
50
40
10
1979 elections
1 1 1
0 1979 80 81
1983 elections
-
1
I
1
1
1
1
82
83
84
85
86
87
Source: Social Surveys ,(Qallup�Poll) Ltd:
1987 elections
1 1 1 1
88 89 90 91
Labor
Conservative
Alliance/
Democrat
Busluess Conildence ja the Economy,
Percentage clifference between those niho are more optimistic
, about business praypects and those who are less optimistic
'compared to four months ago
.
1983 elections
1987 elections
20
-20
_ 60,
Iiiiii,itiiiliitI
iii
I i 1 1 1 1 i
34 1 2 3412 1 4 1 2 34 1 3 4 1 2 34 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 34
1980. '.;81 84 85 86 87 88 89 90
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01
entering the European exchange-rate mechanism (ERM), Labor
leader Kinnock already is hinting his party will support a European
central bank.
In all Thatcher's years in office, the British economy has never been
in such poor shape this close to a general election. One must be called
by June 1992, and she probably now has less than a 50-50 chance of
turning the economy around in time. Prolonged high interest rates
tipped the economy into a recession in the third quarter of this year,
and Chancellor of the Exchequer Major forecast growth of only
0.5 percent next year. Inflation is currently approaching 11 percent.
The hoped-for boost from taking sterling into the ERM and cutting
interest rates early last month has failed to materialize. The UK's
commitment to; the ERM may constrain the Tories from lowering
interest rates as rapidly as they would like next year. In addition,
public anger is likely to erupt again next spring when new and almost
certainly higher poll tax rates are announced and an 11-percent hike
in the uniform business tax hits small businessmen who have formed
a solid base of Tory support in the past.
Thatcher's Prospects for Survival
Although reports from London suggest that Thatcher
stands a goo c ance to withstand a challenge, some MPs are
considering abstaining on the first ballot, a strategy that could make it
difficult for Thatcher to defeat Heseltine. If the contest goes into a
second round, Thatcher's chances of winning will drop significantly
because many Tory MPs probably would prefer a compromise
candidate to end intraparty strife. If Thatcher survives a challenge
from Heseltine, she is likely to moderate her anti-EC rhetoric to try
to unite the party, but the EC intergovernmental conferences on
monetary and political union, set to complete their work by
mid-1991, may force the government to take a clear stance before
the next general election.
Polls suggest a decision not to participate in economic and monetary
union would be very unpopular, particularly with businessmen. On
the other hand, Thatcher risks undermining her position and
alienating the Tory right wing by reversing her stance. The poor state
of the economy also leaves her little maneuvering room. In the past,
memories of Labor mismanagement in the 1970s and a buoyant
economy have paved the way for Tory electoral success. Although
polls Continue to show the Tories are more trusted to run the
economy, the length of the current slowdown may begin to sway voter
opinion, particularly because Labor has moderated many of its
radical views and is now seen by many as an acceptable alternative.
CIA, DIA-
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