CITY AND SUBURBAN
Solomon sets out to bind the Belgians, and Kenneth Clarke's options narrow
CHRISTOPHER FILDES
Solomon Binding is alive and living in Belgium. This discredited figure has not been seen here since the 1970s, when he used to feature in Solomon-Binding agree- ments with the unions and in the social contract — not, of course, like other con- tracts, enforceable. Now poor Fons Ver- plaetse, in such time as he can spare from governing the Bank of Belgium, has had to draft a social compact between govern- ment, employers and unions. Pay rises should be staggered, he says, and share- holders should be surtaxed. These are the Solomonic economics of kicking the dog to teach the cat a lesson. For Mr Verplaetse, they are a displacement activity, a change from his doomed attempt to keep his franc up to the mark. Europe's doors to cheaper M. oney and economic recovery swung open in August, when the lock of the exchange rate mechanism fractured, but the French and the Belgians still squat in their cages, and now have Solomon to keep them corn- PanY. We must suffer with them, for these are our markets — we need an export-led recovery and more than half our exports go to Europe. It is an anxious prospect for Kenneth Clarke, six weeks off his maiden Budget. He does not need to be told —as his seven advisers told — him this week that his options are narrowing.
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