Prime Minister Margaret Thatcher said Friday she will not change the economic policies that led to the treasury chief's resignation and plunged her government into possibly its worst crisis.
Britain's financial markets were rocked by news of the revolt Thursday. The pound plummeted late Thursday, sank further early Friday, then stabilized. Stock prices, in their first chance to react, dove this morning before recovering some of their losses.The new chancellor of the exchequer, John Major, was named to the post Thursday after Nigel Lawson abruptly resigned, saying he could not continue to serve as long as Thatcher retained Sir Alan Walters as her economic advisor. Walters resigned shortly afterward. He did not give a reason.
Major said Thursday he will continue Thatcher's fight against resurgent inflation with high interest rates, which already are at an eight-year high of 15 percent.
Thatcher told reporters outside her office Friday that government policies will continue "precisely as they were" despite Lawson's resignation. She expressed regret at his departure, citing his "enormous" achievements, but said her new appointments were all experienced ministers.
Home Secretary Douglas Hurd, the Cabinet member responsible for law and order, became foreign secretary. David Waddington, chief government business manager in Parliament, became home secretary. No replacement was announced for Walters.
The government says there is no alternative to high interest rates to fight inflation and maintains the problems of inflation and record trade deficits are improving. Critics say the policies have pushed Britain to the brink of recession, and many in the public seem to agree.
The government trails the socialist opposition Labor Party by up to 10 percentage points in opinion polls. The next general election, however, is not due until mid-1992.
Labor party leader Neil Kinnock, in a BBC interview Friday, blamed the crisis on "the utter incompetence of the prime minister." The Times of London, which normally supports Thatcher, said she faced her biggest crisis since taking power in 1979.
The Independent newspaper said some members of Parliament have secretly discussed the possibility of a leadership challenge after the new parliamentary session opens next month.
But senior Conservative leaders echoed party Chairman Kenneth Baker, who dismissed any suggestion that Thatcher's position was at risk.
"She has been in many difficulties and come through them successfully. There is not an economic crisis. The economy of the country remains very strong," Baker told BBC radio.
Major said after his appointment that fighting inflation remained the government's overriding objective.