CITY AND SUBURBAN
Saintly and humourless cats in stitches over the EMS auction
CHRISTOPHER FILDES
The political auction over the Euro- pean Monetary System is more than enough to make a cat laugh. Not even Webster, Bishop Mulliner's saintly and humourless cat, could have resisted a twitch of the jowls and a faint crinkling of the whiskers. The bidding, you will recall, was opened by a Tory consortium headed by Nigel Lawson. Unfortunately for them, the party's political cheque-book was still in the Prime Minister's hands, and much as she was urged to admire this curious and interesting gadget, often as she was told that the chance might not recur, she did not like it and she would not buy it. The quarrel drove her Chancellor out of the auction — and his Shadow seized the chance and put in a pre-emptive bid of his own. To him, it was worth bidding up. It had tactical value — it could shut out the Conservatives from what should have been a naturally strong position, letting Labour appear the more European party, as well as the more soft-hearted, more railway- minded, and all the other things which come easily to it. More important to John Smith, the EMS had strategic value. It franked Labour's economic policy as re- spectable. Indeed, to all the sticky ques- tions it was the respectable answer. What are you going to do, Mr Smith, about inflation, public spending, the pound? We shall join the EMS. Oh that's all right, then. The bid was almost too successful, because it has lured the Conservatives back into the auction. They, too, can bid to join — and what's more, to join before the election, so that when it comes, they can deprive Mr Smith of his respectable answer and ask him what he means to do next. If that seems a carefree approach to an economic decision, it is. They and many of their City friends are curiously carefree on the whole subject. They believe that when sterling is wedded to the EMS a honey- moon will follow. (A glance at the markets now suggests that, in the modern style, the honeymoon is preceding the match.) Dur- ing this happy interval, the matrimonial pledges will suffice to impress everyone, and sterling will not need to be held up by high interest rates. Presto! Down they come, and down come mortgage rates and the inflation rate, just in time for an early election. What happens to the pound after that? Don't know, old boy, worry about that later, and anyway, we'll be in the EMS, won't we?
Previous page
