CITY AND SUBURBAN
A scaring trip by Fraser Nash through the Home-buying Counties
CHRISTOPHER FILDES
My cousin once owned a 1934 Fraser Nash of which he said that the engine would do 80 m.p.h. but the car wouldn't. That intrepid motorist Nigel Lawson now knows how it feels, as he tries to slow down the British economy's engine before the wheels come off. Will his chosen lever, high interest rates, do the trick? They cannot of course check inflation where it is at its worst, in the public sector, which does not care a hoot about the price of money, but Mr Lawson can certainly scare the rest of us. A happy New Year, he says, and I shall not hesitate to raise interest rates further if I need to. There is no telling when he may need to influence foreign holders of sterling, but if what he needs is to influence us at home, the signs are that 13 per cent base rates and 133/4 per cent mortgage rates will do it. A shocking figure comes from Robert Thomas at Greenwell Montagu: 'More than half a million house- holds now have to pay more than 40 per cent of their disposable income to service their debts.' To get these debts off their books they would have to sell — but forced sales in this year's market could easily wipe the sellers out. Their only hope is to sit tight and stop spending. I wonder whether, in by-elections this year, there will be such a thing as a safe Conservative seat in the Home-buying Counties.
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