22 MAY 1993, Page 22


Now we know that the plan doesn't work, let's all sign up for it


Isuppose it is all right for the Danes and us to sign up for Maastricht so long as we understand that nobody means it. France's prime minister, Edouard Balladur, says that monetary union has been blown off course (C, J. Callaghan, 1966). Helmut Schlesinger, the Bundesbank's head cook and bottlewasher, goes on explaining that those who cannot stand the heat ought to move to a cooler part of the kitchen. The Spanish, with their third devaluation in eight months, have taken him at his word. Robin Leigh-Pemberton, who signed Jacques Delors' blueprint for union and with sublime courage came home and told Margaret Thatcher, now suggests that the plan came out the wrong way round. Its idea was that monetary union would bind Europe's economies closer together. In fact, economic differences have blown the currencies apart — or, as the Governor puts it: 'Attempts to move exchange mar- kets in directions that are not consistent with underlying policies nearly always end in disappointment.' There speaks the man- ager of our official reserves, or what is left of them after his costly attempts to keep the pound up to the mark in the European Exchange Rate Mechanism. This week's disavowal comes from Kenneth Clarke, who meets my specification that the next Chancellor must be a bruiser, but was thought to be anxious to see sterling back inside the ERM. Now he says that in the lifetime of this parliament, the question is not likely to arise. As he proved with the Criminal Justice Act, he knows how to cut a loss. How bizarre it now seems that the general election was fought out between three major parties whose economic poli- cies were all based on the ERM! It seemed odd at the time, as I said. They all lost.

An Old Moggie writes

NOW THEY must suffer being put in their place by Lord Rees-Mogg, who pauses from patronising the Prime Minister to hoot at Sir Norman Fowler. As it happens, Sir Norman and I are fellow-graduates of the Rees-Mogg School of Journalism. When robbers brought the Times a much- needed story by stealing its payroll, young Fowler was the intrepid newshawk who chased them in his car — luckily for him, theirs was faster. I was the money market specialist: 'The authorities gave help on a

moderate scale and lent seven or eight houses small sums at Bank rate.' This must be what our old editor means when he says that he preferred those who had something interesting to write and could write it in a colourful way. Now he tells Sir Norman: `Your establishment supported British entry into the ERM: I warned against it.' Well, more precisely, I warned against it and he, in magisterial columns, was all for it. It was only when we signed up that he warned that we had gone in at the wrong rate. Money market experience suggested to me that there was no such thing as a right rate. It has been a pleasure to recruit him to my point of view, even if Sir Norman and I cannot quite resist sending him up.

Withdrawal symptoms

THERE IS now no such thing as safe inter- course in the City — not even with your regular partners. That is the bad news for London International, the pompously- named condom maker. It settled down for a nice quiet session with investors and ana- lysts, taking what it thought were the prop- er precautions. Such things happen every day, and can be healthy, for this is an area where the greatest health hazard is igno- rance. The Stock Exchange, though, has come down on it like Mrs Grundy, saying that these goings-on are all wrong and must stop. It wants celibacy. It will get dangerous liaisons or coitus interruptus.

In my sleep

SLEEP, as the French dramatic critic Edmond Got remarked, is also a form of criticism. I am a regular attender at the Bank of England's briefings on its bulletin, and have now nodded off in the last six. Maybe. they should be held before lunch. Certainly the Bank is trying to liven them up, relaunching its commentary as an Infla- tion Report and dotting it with graphs in six different colours, including grey. Readers are encouraged to draw their own conclu- sions. I conclude from the graph about per- sonal borrowing that people are too deep in debt to rush out and borrow and spend more. I trust the graph of the money sup- ply, measured broadly — through blip and slump it has for years been the best forward indicator of inflation, and its growth rate is below the range set by the Government. This part of its policy is not stirring up inflation, and there should be room for fur- ther cuts in interest rates. Fiscal policy (the Government's own borrowing and spend- ing) is another story. At this level it will, the Bank says, leave a significant burden on future generations. The textbook way to lighten that burden is to inflate it away. Or did I miss something?

Money down the hole

I CAN CONFIRM from direct experience that the tunnel under Limehouse basin, opened by the Prime Minister on Monday, has brought Billingsgate Market several minutes closer to Fishmongers Hall. Whether, at £130,000 a yard, it is worth the money is another matter. This Govern- ment, though, has long been schizophrenic about Docklands — a splendid example of what can be done without state interven- tion, and therefore to be propped up at the public expense. I would dig the tunnel up and put it under Twyford Down.

Regrets only

PLUMPLY on my desk squats the prospec- tus from GPA, Dr Tony Ryan's wonderful invention of an aircraft leasing company today Shannon Airport, tomorrow the world! It is powered by 18 investment banks and Dr Ryan has it choicely fitted out with non-executive directors: Garret Fitzgerald, Sir John Harvey-Jones, the Rt Hon Nigel Lawson... Alas, the prospectus is exactly one year old, the issue never took off, the Americans are in control, the shares stand at a small premium to a jam tart and some of the gloss has gone off the directors, for a man is known by the companies that keep him. As for the former Chancellor, he could pick up a defiant tune from the pre- sent incumbent: Je Ne Regrette Ryan.