CITY AND SUBURBAN
We could have better trade figures once we've abolished them
CHRISTOPHER FILDES
What a splendid way to mark our European presidency. We are going to abolish the trade figures. They are based on the observations of customs men at the ports, and now that we are about to move into a tariff-free Europe, the observers will be stood down. It is a triumph for the Soci- ety (founder chairman: Samuel Brittan) for the Abolition of Inconvenient Statistics. Now the Society must move quickly, for there are plans to start a new series of trade figures in a year's time, basing them on VAT returns. I just hope that the new figures make better sense than the old ones. Look at May's: imports £10 billion, exports £9.2 billion, invisibles plus £200 million. You would not think that invisibles (the service industries' transactions) were as big as Britain's trade in goods, and, of course, in better shape. That £200 million is a net figure. It also muddles up the Gov- ernment's figures (which show a deficit) with those of the private sector. It looked weak, earlier this year — not because our invisible exporters were not doing their stuff, but because the hapless Treasury was sending more money to Brussels. The fig- ures should treat our international invest- ments, not just as a source of income, but as representing capital gains — or so the investors intend. They should allow for the general tendency to underestimate invisi- bles (because you can't see them) and to under-record exports, which, when you add up the world's trade figures, seem to be dis- appearing into a global back hole. They might, in fact, suggest that we were doing quite well. That should earn them a reprieve.
Parliament of fowls
MUNICH'S new airport is so deep in the Bavarian countryside that the quickest way to reach it is by air. This weekend it will be tested to destruction by the heads of gov- ernments and casts of thousands assem- bling for this year's economic summit. If they get no further than the airport bar, they will not miss much. As Sir Nigel Wicks, sherpa to the British summiteers, tends to explain, the summit is not a place for decision-making. These meetings have long since lost their point. By now the occa- sion is what matters. The host country takes its turn to show off, the heads of gov- ernment appear for photo-calls and overeat at banquets, the communiqué will have been written already. This has nothing to do with economic management, and to sup- pose that it might is a delusion that could be dangerous. At last year's summit, in London, the world's leaders forecast growth and agreed on anti-inflationary poli- cies. This, as I noted at the time, was what they had said a year earlier: 'These are ritu- al incantations, but you would get better economic forecasts from a parrot.' I bet they say it again, though. Silly Polly.
Necessary paranoiac
FANCY packaging, smooth coating, soft centre — the Cadbury style of boardroom government has arrived at British Petroleum. Sir Adrian Cadbury and his committee (or working party, or task force, or whatever) said that boards should have lot of committees — audit committees, nomination committees, remuneration committees — and lots of non-executive directors to vote each other onto them. They would thus be enabled to curb the impulsive conduct of the chairman or the chief executive, especially in companies so backward or so parsimonious as to let one chap double up in both jobs. I can see that Robert Horton, who doubled the jobs at BP, did not fit the Cadbury process at all too knobbly, too indigestible, too hard-cen- tred. He fell foul of BP's non-executives, led by a retired general, a retired diplomat, and a City grandee who slid smoothly into the chair. Finsbury Circus, BP's headquar- ters, will now be a less fractious place, except when the figures come out, and these can conveniently be blamed on Mr Horton. BP is in fact suffering from expen- sive strategic decisions, nodded through by directors who then picked Mr Horton to sort out the consequences. That can be a job for an awkward man. Frank (now Lord) Kearton, who transformed Courtaulds, is sketched in the company's history as a nec- essary paranoiac. Courtaulds' board used to be stuffed with imposing directors — gen- erals, diplomats, people like that — but I rather think he got rid of them. How shocked Sir Adrian would be.
Happy hour
MY MARTINI exchange rate target is on the horizon. This week the pound touched $1.90 — only another ten cents before we fly to America, there to absorb ourselves in martinis, or vice versa, until the foreign exchanges wake up and see sense. To com- pare what money will buy, in London and New York, is to see that a one-for-one exchange rate — £1 =$1 — would be more like it. Today's exchange rate must make British goods and services (martinis, for example) uncompetitive against those of the world's largest economy. The markets, though, fret about sterling's weakness oh, dear, we have lost ground to the mark, we are at the bottom of the European league table again... We are mesmerised by the mark, just as we used, with more rea- son, to be fixated on the dollar. Germany's problems remain the opposite of ours. The Bundesbank complains that its money sup- ply is still growing too strongly — so no interest rate cuts until it starts to behave. The US Federal Reserve is being nudged to lower its rates and keep the fitful US recov- ery going. The pull of interest rates hoists the mark, lowers the dollar, and leaves the pound with the worst of both worlds. It is not a great way to manage a currency or an economy, and I wonder how long we can subsist on a policy of hanging on and hop- ing.
Recycled paper
HIGH JINKS at leafy Debden, where the Bank of England prints money. Used bank- notes, when their time is up, come back to Debden to be incinerated — but some of them seem to have found their way to a posthumous existence, returning to circula- tion, slightly scorched. It is not, of course, meant to happen, even though the money supply does need a boost. Suspicions, I learn, were aroused when a local insurance broker suddenly found himself deluged with business from customers who pre- ferred to pay cash. He could smell burning.
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