Economy: Alan Walters diary [PM angry about the “nanny” attitude to Bank Mortgage lending; PM keen that indexation would bind her successors - Howe disagrees, but Walters notes Chile; Harrington advises aboliton of wage councils][released 2012]

Friday 22nd January 1982

Monetary Meeting. PM + GH [Sir Geoffrey Howe] + Gvr [Governor of the Bank of England, Gordon Richardson] opened very unpromising - PM mad about the “nanny” attitude to Bank Mortgage lending

- tax position on interest rate

- worried about lending

LSE 11.30 [line crossed through]

Gvr vanquished on derestricting indexed gilts and on EMS entry. GH equivocal as usual

PM very keen on argument that indexation would bind her successors and would provide a refuge for funds that would otherwise flee as election approaches (my memo of 21st)

Gvr &#43 GH talk about steps along the road to total indexation - from which no country has recovered [Brazil, Israel] - but I said Chile!! An exception.

NatWest reduced base rates to 14 while mtg on.

Peter Carrington said he supposed to say [sic] that crisis entry would confirm Europeans + great help with Euro budget etc. But he said he did not believe a word of it! Foreign office guff. PC [Peter Carrington] said that you could not trust them - “a lot of foreigners”

Helped AD [Andrew Duguid] with memo to PM advising abolition of wages councils - Tebbit merely wanted to make youth wage proportional to adult - silly.

PM saw me for ½hr - says again she must get rid of GH.

Budget - she would like to have 1½ Bn in hand.

V. annoyed at GH saying that unchanged PSBR will be £7.5 Bn in draft for Cab Mtg on Thursday. “Hide away £1.5 Bn”.

PM is writing to Peter Newman - very nice letter she “would not want me to stay after Sept 83.” - yet another manifestation of her decency and consideration

PM - I must keep her informed on the budget discussions - wants to know how it is going.