THE ECONOMY
A performance worthy of the old actor-manager himself
JOCK BRUCE-GARDYNE
So we had 'better wait and see', had we? Whether Mr Lawson will be much longer with us, I mean. In other words, I take it, the message across the garden wall is, 'Watch it, woman. One of these days you will go too far, and then we'll see how you get on without me.' To which the currency markets flatteringly replied, on Monday and on Tuesday. 'Don't do it Nigel! Please, please don't do it.'
The panic is uncalled for, since it isn't going to happen. To be brutal, our Chan- cellor has nowhere else to go to. As I have suggested before in these pages, if some- one turned up at the door of No.11 and invited him to become Chairman and Chief Executive of – let us say, for the hell of it, the Midland Bank – 'remuneration pack- age' to be negotiated, I believe he'd be off before you could say 'exchange rate mechanism'. And phooey to his place in the history books. But fortunately for one and all of us, no such messenger will materialise. It's the 'chief executive' bit that sticks in the craw.
I say 'fortunately for all of us' because he is once more showing himself to be as smart as the proverbial cricket. Harold Macmillan must be gazing down upon him in awe and admiration. Like the old actor-manager in his heyday, he is shouting loud in one direction, and moving very subtly in the other.
Once again the Simon-pure monetarists, and the wringing wet Keynesians, are being passed the dummy, and mistaking it for real as they are intended to. 'He's so obsessed with his idiotic EMS,' say the Budgens of this world, 'that he puts the rate of interest up to 15 per cent, 16 per cent, levels quite uncalled for by the state of our economy, just so as to hang on to the coat-tails of the dollar. He's making precisely the same mistake as in 1987, when he stalked the deutschmark, only this time in reverse.' To which the Keynesians echo, 'and he's failing: for while he turns the screw on interest rates and murders the home economy, the pound slithers down regardless, for all his fine talk about currency stability.'
As for the dear old Euro-groupies, they are doubly diddled. 'If only we were full members of the club, we would be spared all these miseries. The unions, the currency speculators, the boardrooms would know that we were committed to matching Ger- man inflation rates, and pile into pounds accordingly."Yes, well,' murmurs the Chancellor mournfully, 'that may be so. But it's all a matter of politics (i.e. you know who). So we must be patient. We'll book the church for 1991, or 1992, or better still just as soon as I can scare her into believing that she really has got to choose between losing me and giving im- mediate clearance for the marriage.' Meanwhile he paddles like fury in the opposite direction.
It is a supremely skilful piece of juggling (to change the metaphor), and it is an entirely open question whether or, perhaps, for how long our juggler will contrive to keep all his balls in the air. He has to persuade the currency markets that he will throw in all the defences available i.e. the currency reserves, and sharply higher interest rates regardless — if they push the pound too far (downwards). He has to persuade the boardrooms that the pound will be kept 'high' however much they groan and grumble. He has to per- suade the unions that, if they try their luck, their members will lose their jobs again, as they did in 1980. Meanwhile he will,in practice, gently slip his moorings from the dollar (and the deutschmark, for that matter), and hope and pray that no-one notices that that is what he is up to.
And as if this were not enough, he has to cope with sniping and griping from across the garden wall, and that barrow-boy economist Sir Alan Walters whispering poison into the boss's ear. It is more than flesh and blood can stand, is it not?
On the contrary. Truth to tell, the clamour of the critics is essential to his act. If the Prime Minister, the CBI, Sir Alan Walters, the unions, the Treasury Select Committee, the Beaumont-Darks, the Budgens, and all the rest did not exist he would have needed to invent them. All are essential to his smokescreen, and all are puffing smoke like dragons.
So he may yet get away with it: and certainly there is no better line of route on offer. Just so long as he stands ready to go about at the very first sign that the wind is changing. It must be true that the markets will in due course lose their current passion for the dollar, and that when they do, its fall could be substantial. Then our Chan- cellor will have to run like the clappers, shoving the pound back up again in front of him. In the meantime we must just hope and pray that the cost of tick and the slippage in the value of our family homes (at least in the south east) finally convinces us to throw our plastic cards away. They might.
But just in case Professor Rowland Smith and other heroes of the Boardrooms should be eavesdropping, it might, perhaps, be just as well to add a word of warning. They want a $11/2 pound (or less) so that they can sell abroad on price instead of quality. And, of course, if like Professor Smith and his comrades in dis- tress on the good ship Airbus you build in pounds and get paid — if at all — in dollars, you do have problems. But neither the Chancellor nor the Prime Minister are going to sort out those problems for them. If the pound goes down, it must be made to come up again just as soon as the present storms are over.
Finally, the impact of the pound's slither on inflation expectations ought to be con- tainable. Just so long as it doesn't last, that is.
Previous page
