Here is the news - of 1994: Politics

AT TIMES, 1993 looked like John Major's annus horribilis, but it ended on an upbeat note for the Prime Minister with a skilfully negotiated Anglo-Irish statement on Northern Ireland and an improving economy. The first part of 1994 will be rough, however, as the effect of last year's two Budgets is felt.

Not only will the voters be affected by the addition of 8 per cent VAT on domestic fuel, but also the widely forgotten 1 per cent increase in National Insurance contributions will hit pay packets in April, as will a reduction in mortgage interest tax relief. The year will also bring rising Council Tax bills and increased insurance premiums.

This will form the backdrop to local and European elections which will spark renewed panic in Tory ranks. In the local elections in May the party faces defeat in key boroughs such as Brent, Ealing, possibly even Westminster. The Euro elections the following month will cause friction. The Tories, having performed badly in 1990, face wipe-out in the South- west, where the Liberal Democrats will proclaim a 'historic' breakthrough with their first representation in Strasbourg.

These results will start another severe wobble in the Tory party and Mr Major will be back in the firing line. But he will deflect some of the flak with a reshuffle which will move Sir Norman Fowler from Conservative Central Office - with David Hunt replacing him - to a Cabinet post. This apart, ministerial moves will be less extensive than many expect, unless Michael Heseltine or Douglas Hurd leave the Government of their own free will. That would open the way for Cabinet promotion for the likes of Stephen Dorrell and Jonathan Aitken.

Despite continued worries over the Government's performance, rising economic optimism will see Mr Major through a rocky late summer and early autumn, into party conference. When November comes around, he will escape without a leadership challenge.

All this might seem rosy for Labour, but 1994 is sure to present problems for John Smith, the party leader. With Labour's Social Justice Commission due to report in the autumn, he will have to respond by beginning to set the Opposition's agenda for the next election. His instinct - caution - will provoke new criticism.