Thatcher policies costly — O.E.C.D.

Press, 17 February 1983, Page 11

Thatcher policies costly — O.E.C.D.

Parliamentary reporter The tough monetarist policies of the Thatcher Government in Britain have been found wanting by Mrs Ann Hercus. the Labour member of Parliament for Lyttelton. She is on a six-week study tour overseas, looking at incomes and prices policies. The “tough medicine now for a health economy later" strategy in Britain had taken a major nose-dive in credibility with the publication of an Organisation for Economic and Cultural Develop-

ment report. This report s message was that the Conservative Government's reduction of inflation had been bought, not only at the expense of enormous short-term costs, but at the expense of worsening long-term prospects as well. Mrs Hercus said. The keystone of Mrs Thatcher's policy during the last three years had been to lower inflation, on the grounds that this would after a short period stimulate employment, productivity, investment and growth. * The rate of British inflation had certainly dropped (to 4.9 per cent annual rate)

although it was likely to rise (to 6 per cent) in a fewmonths, she said. This reduction had been paid for by horrific levels of unemployment, which has leaped from 5 per cent three years ago to 13 per cent of the surveyed labour force. Longer-term prospects for the economy also appeared to be worsening, according to the report, Mrs Hercus said. The report predicted that there would be higher unemployment, rising to 14.5 per cent in 1983, and economic growth would be "weak” at just over 1 per cent for the next 18 months.

The O.E.C.D. was also critical of lack of public investment. high interest rates, and a lack of tax cuts at the lower end of the income scale, she said. Mrs Thatcher's experiment to lower inflation rates artificially had strong parallels in New Zealand under the Muldoon administration, even though the economic tools differed somewhat. The end result for both countries seemed to be the same — artificially lower inflation but rising unemployment and industrial anaemia, as far as the eye could see. Mrs Hercus said.