THE ECONOMY
After the trade figures, the jury is still out
JOCK BRUCE-GARDYNE
Across the wires th'electric message came He is not better, he is just the same.
awful lot of them — who were reckoning that the September trade figures would finally prick the bubble of the Chancellor's complacency, or alternatively (a smaller band, this, since Schadenfreude is much more fun) demonstrate that he really was the pilot who weathered the storm after all — have had a disappointing week. Yet again, neither the worst nor the best has happened. The jury is still out. Even Sir Alan Walters remains unsacked at the moment of writing.
I suppose it's too much to hope that after this sad anti-climax the monthly trade returns will revert to their proper place as Just one of the many more or less mislead- ing indicators of our progress through this vale of tears.
But perhaps we should start by getting the opinionated professor out of the way first. Of course he should not go on repeating what purports to be the pillow- talk in No. 10 to all and sundry on both sides of the Atlantic, and the Prime Minis- ter ought to have the nous to see that Cabinet solidarity applies to her and her known entourage. But much of the com- ment of recent days, suggesting that Alan Walters will be the death of poor old sterling, has surely been absurd. Whether we are back on 'the rake's progress of Perpetual devaluation' depends on rather more tangible items than the opinions and influence of the Prime Minister's absentee adviser.
What the markets dislike and go on moaning about, of course, is the inability to judge with confidence whether the next assault on sterling, if and when it should materialise, would be met with another Jump in interest rates and a heavy buying Programme by the Bank of England, or by masterly inactivity. Such uncertainty, we are told, is 'deeply damaging'. To whom, pray?
Why, to market traders, that's for sure — if you compare it with the alternative. If they only knew for sure that Mr Lawson would not let the pound slip by another pfennig, then how easy it would be to turn an honest penny by trying his nerve with some judicious selling of the currency. A nice little one-way bet. Whereas as things stand he might — he just might — spring a
sudden bear trap, regardless of the views of Professor Walters, and there would be blood all over the dealing-room floor. Not at all the way for responsible Governments — least of all Tory Governments — to behave.
The CBI agrees, however, that its mem- bers also find the uncertainties malodor- ous. A splendid firm like Jaguar sweats its guts out to carve a niche for British luxury cars on Main Street, only to discover that the dollars it thus earns translate into far fewer pounds than it had every reason to expect, and yet it has to pay its sharehol- ders and suppliers in pounds and not in dollars. Jaguar's Japanese competitors seem to get by remarkably well in similar circumstances by buying in components around the Pacific Rim, or switching to sourcing in the United States itself. But then they are not gentlemen.
Mind you at the moment the CBI is evidently more concerned with troubles nearer home. This week's Quarterly survey of its members' state of health does suggest that the great corporate investment boom is over, and indeed that many of them are now beginning to be faced with an over- hang of stock on their hands which is going to be increasingly painful to finance. In other words it rather looks as if those uplifting charts on which the Union Flag waved proudly at the head of the bar which topped the European league tables in Mr Lawson's periodical television appearances will have to be put back in the Treasury's cupboard for a season. Ah, well, all good things must come to an end.
Meanwhile, let us spare a thought for that happy hand of brothers and sisters in the Euro-currency club which that wretch- ed woman will not let us join. Not quite as happy as it used to be, by the looks of it. Herr Pohl of the German Bundesbank seems to have found himself acquiring Denmark's currency reserves for safe keeping and not enjoying the experience. The Spaniards, newest members of the Club, complain that they are being bullied unmercifully by Bonn to devalue their pesetas when they, like us, want to keep their currency relatively dear to control their own inflation (noone can say they were not warned). As for the French, with whom Bonn is supposed to enjoy an amide amoureuse, they maintain an outright veto on any general realignment of exchange rates within the system, on which Herr Pohl seems to have set his heart. Sounds just like our own dear Commonwealth. Or perhaps one should not say that too loudly. It might give the Prime Minister ideas.
`If you'd care to glance at the small print, Sir, you'll see that you were insured against someone burning your house or stealing your car or drinking your liquor from an old fruit jar, but you weren't, unfortunately, covered for someone stepping on your blue suede shoes.'
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