CITY AND SUBURBAN
Christchurch would vote for dearer money, but the economy wouldn't
CHRISTOPHER FILDES
The Christchurch by-election looms ahead, and if Kenneth Clarke wants to win it for his party, the obvious solution pre- sents itself. He must put interest rates up. People retire to that mild Hampshire coast, they live on their savings and their interest; they warmed to the ice age of dear money and now they are feeling the chill. Until now, the rule has been that the Conserva- tives' vote goes up and down as the mort- gage rate goes down and up, but that link is looking less mechanical. It takes six deposi- tors to finance one mortgage, and they have votes too. All the same, Mr Clarke must brace himself to their disapprobation. His budget deficit has already begun to give the markets indigestion. He must treat it with tough spending plans and a tough bud- get. If he needs to foster the recovery, all he can do (as his seven sages remind him) is to feed it cheaper money and a competi- tive exchange rate. That will help it to keep going on a diet of exports. Peter Warbur- ton of Robert Fleming sees this happening. The recovery, he says, is patchy, and cannot depend on consumer spending: 'Strong growth in demand for exports, particularly outside Europe, will be the main source of propulsion in the economy this year. Manu- facturing sectors have prospered in direct proportion to their export exposure.' That must be what Mr Clarke wants to hear, even it it does not wow the pensioners of Christchurch.
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