Friday 8th January 1982
9.00 C/E [Chancellor of the Exchequer] Gvr [Governor of the Bank of England] etc at No 11 on interest rates. Gvr adamant that he would not guarantee a reduction of ½% in dealing rate during next two weeks even if things remained unchanged. I pressed the case for him to define policy - he would not - said “Do you not trust the Bank?”
Agreed with Peter M [Peter Middleton] (a) account of meeting to go to PM (b) agenda and conclusions of meeting next Wednesday.
Lunch Harold Lever - exposure of Banking System to debt reneging.
PM saw me about GH [Sir Geoffrey Howe] - asked me to draft letter to GH saying that all meetings between GH + Gvr were to be at No 10 with her there - wow - this will undermine GH completely - saw Clive [Clive Whitmore] and he agreed it would be BAD - I drafted an alternate ending “concern” etc.
- PM says she must get rid of GH after Budget.
KJ [Keith Joseph] - about future.
[Double lines connect following sentences back to “PM says she must get rid of GH after Budget”. “I have made an enemy out of one of my closest friends” [MT commenting on Howe? see PDF original]
She asked me again to find a potential Gvr and Dep. Gvr - she knows that Kit McMahon is hanging on.
PM “Appoint AW [Alan Walters] to court” [Court of Bank of England]