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Thatcher had one resource that was helping ease the nation's financial burden: the North Sea oilfields. They were to make Britain self-sufficient in petroleum by the end of Thatcher's first 18 months in office. Typically, Thatcher refused to distribute the oil at cut rates to British industry. British consumers had to pay the full market price.
But, inexorably, the recession affecting the whole industrialized West came to be felt more and more painfully, and in Britain the promised Thatcher recovery did not begin. By last autumn, the public mood had turned sour. When the poor year-end statistics were made public, Thatcher was being pilloried for what Labor's Denis Healey, former Chancellor of the Exchequer, called her "punk monetarism." Said Eric Varley, Labor's spokesman on employment matters: "The consequences of this doctrinaire obsession are still wreaking havoc in every part of the country." Thatcher's own Industry Secretary, Sir Keith Joseph, glumly admitted that his government "lost the first year," and the Economist magazine, which had supported Thatcher's election, characterized her economic experiment as "a prescription for electoral suicide."
Britain's economic condition is indeed worse in virtually every respect than when Thatcher took office. At the outset, she had said it would take 18 months to two years for results to show, but that timetable is nearly up and the turnaround is nowhere in sight. Inflation, 10% when the conservatives came in, is now 15%, though that is a considerable improvement from a high of 22% last summer. The gross national product has fallen from 1.5% growth in 1978-79 to a negative 3% for 1979-80. Some 10,000 businesses went bankrupt, a record. Unemployment climbed by a phenomenal 66% in 1980 —and 86% since Thatcher took office. In the manufacturing regions of the north, 14.8% of the male work force is jobless. Meanwhile, the government has been unable either to control the money supply or control public spending, the two keystones of its monetarist policy. The budgetary deficit for fiscal 1980-81 was first forecast at $20 billion, then revised last November to $27 billion. Now government sources expect the deficit to exceed $30 billion, an increase of $7 billion over last year's deficit. To compensate, Thatcher and her Cabinet are now talking about imposing new taxes. Ironically, it is the private sector—the area of her prime concern and source of her strongest support in the last election—that is suffering the most.
What went wrong? In initiating Milton Friedman's theories, Thatcher seems to have discovered a catch-22. Push interest rates to a record high, which she did, and it is private enterprise and individuals who have to curtail investment and spending. Force noncompetitive businesses to wring out their slack and unemployment rises. As workers "go on the dole," the