CITY AND SUBURBAN
The pound tells ministers what to do and worse things happen at sea
CHRISTOPHER FILDES
been out in a Force 12 sterling crisis, like us old hands, you'll know that this is an air-pocket. Why, we have $50 billion still in reserve, and all those overseas investments too! When the selling orders are breaking green over your bow, and you can see the bottom of the till, and you've tried ringing round the other central banks, and you're wondering what to tell the IMF — that's a sterling crisis. What we have had is a reminder of the pound's unique power to make ministers do what they did not mean to do. The Treasury thought that its policies were working according to plan, the Bank of England said (what it does not always say) that the policy mix was broadly right, the stock market was heading happi- ly up into the wide blue yonder . . . . Now comes dearer money to bring it tumbling back. As we bump about, it is worth remembering that the pound is still well above the 3-deutschmark level which the Chancellor a year ago thought was the right rate. And 14 per cent base rates? With luck, this will be the top (yes, we thought that about 13 per cent, too) and worse things happen at sea.
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