16 FEBRUARY 1991, Page 22

Tim, Alan and Co

I MUST take care to exclude Tim Cong- don, Sir Alan Walters and Co from the parrot-house. They liked the idea of the ERM no better than I did (as readers may be patient enough to remember) and a cosy little minority we were in at the time. Now they are back with a manifesto which says that the squeeze has grown too tight. Monetarists that they are, they can work out how a monetary squeeze brings on a financially driven recession. (Patient read- ers have seen that arithmetic, too.) Tim, Alan and Co call for cheaper money, and must have been tickled to see the first cut on the morning that their manifesto came out. They also want us to leave the ERM or devalue within it. I think they would argue, as I would, that there is no such thing as a right rate for sterling — but that, to me, suggests that we should rough it for the moment on the rate we have got, and concentrate on getting cheaper money. Devaluing won't do that.