CITY AND SUBURBAN
First stop Blackpool, next stop Bangkok, with a detour through Lombard Street
CHRISTOPHER FILDES
This is the week when Norman Lamont has to fly to Bangkok via Blackpool. He is off to that annual three-ring circus, the meeting of the International Monetary Fund, and he must remember to thank its economists. In a report neatly timed to coincide with his Blackpool speech, they franked his forecasts of recovery. Never mind that Nigel Lawson called them a bunch of unreconstructed Keynesians. In Mr Lamont's shoes, I would be more wor- ried by the monetarists. They are happily franking the Prime Minister's forecasts of licking inflation — which is not the same thing. A good figure for the Retail Prices Index neatly coincides with his speech. The sage of Lombard Street, Professor Tim Congdon, is forecasting the lowest inflation rates since the 1960s. That is because he watches the money supply, now (on its broad measure) growing at its lowest pace since the figures began to be kept — also in the 1960s. Interest rates have fallen but the demand for credit has not risen. Mortgage demand is as flat as a flounder. The phe- rionlenOn of falling house prices (says Tim Congdon) is new to the British middle classes and may be transforming their financial expectations. About time too, but this is not the stuff of which strong recover- ies are made, or not before polling day.
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