Thatcher Under Fire

AFTER a triumphant decade, is British Prime Minister Margaret Thatcher entering the twilight of her premiership? The question - unthinkable a few months ago - is being openly asked in Britain. Last spring, as she celebrated 10 years in office, the Conservative leader looked forward confidently to reelection in or before October 1992, the latest time she can go to the country. There seemed little to keep Mrs. Thatcher from, in her words, going ``on and on'' - especially as the Labour Party still seemed out of step with the British electorate.

Since then, however, Thatcher has hit one political snag after another. In June's European Parliament elections, the Tory slate did poorly. Then the prime minister shook up her Cabinet, moving the foreign secretary, Sir Geoffrey Howe, to the lightweight post of deputy prime minister and replacing him with an able but inexperienced loyalist, John Major.

At the same time, public discontent was growing over such Thatcher policies as the introduction of a new poll (head) tax, the proposed privatization of water companies, and proposed changes in the national health service. Also, many of her countrymen don't share Thatcher's skepticism about greater European unity. Most important, Britain's dramatic economic surge has stalled. Today Britain has the highest interest and inflation rates among the industrialized nations.

Disputes over the economy and, especially, British membership in Europe's exchange-rate mechanism - whereby the pound would be linked to other Eurocurrencies - precipitated the resignation last week of Chancellor of the Exchequer Nigel Lawson. Another hasty Cabinet shuffle ensued.

Meanwhile, Labour Party leader Neil Kinnock has adeptly moved his party toward the center on economic and defense policy. For the first time since the '70s, Labour is widely regarded as competent to govern Britain, and it holds a 10-point lead over the Tories in recent opinion polls. Thatcher's personal poll ratings are dismally low.

Midterm polls are unreliable. Still, the numbers alarm Conservative backbenchers. It's too early to count Thatcher out, especially if she can jump-start the economy again. But with her place in British history secure, retirement may start to look appealing to the embattled prime minister. A key to watch: whether possible successors - including Mr. Howe, Mr. Major, and maverick former minister Michael Heseltine - are emboldened to start maneuvering openly for the Tory leadership.