CITY AND SUBURBAN
Dear John, the honeymoon's over and the pound falls out of bed
CHRISTOPHER FILDES
T
he new Chancellor's honeymoon with sterling has been a short one, but I am surprised that it lasted the weekend. That does not reflect on his prowess —. just on his position. He is where he is because his predecessor was told once too often that he could not buck the market. The foreign exchanges were bound to see Nigel Lawson as the martyr of a stable currency. Equally, they were bound to assume that his succes- sor would not share the same devotion, or at least to test him in action. Their suspi- cions were confirmed this week when he recited the Treasury's holy texts in a New English Bible version which made sterling sound good but not sacred. Nigel Lawson's departure was, to foreign investors in general, the first plain sign that Margaret Thatcher's Government might, after all, not be there for over. These investors cannot now be expected to relish the Conservatives' customary processes of con- sultation or to sign up for the Heseltine school of economic management. Thatcher to them is the name on the British prospec- tus. These are the people from whom we are planning, this year and next, to raise a little matter of £35 billion — the balance of payments deficit which has to be covered by foreign investment or foreign lending. Ministers must expect in such circumst- ances to find their credit tested in the markets. The test usually means forcing ministers, against their will, to do some- thing unpleasant.
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