Cold comfort
THE SONG is ended but the malady lingers on. We had got used to the idea that we could combine rapid growth with falling inflation, but those happy days, so the Bank of England now warns us, are over. The economy is slowing down and inflation is still with us. Earnings are growing faster than they were three months ago and skills are still in short supply. (I am told that you cannot get a plasterer for love or money, but that the going rate is a big kiss and £1,000 a week.) The economists at HSBC, the Hongkong Bank group, say that if the makers of monetary policy had not been lucky with the pound and with the prices of commodities, they would now be staring at an inflation rate of 5 per cent. They need, on HSBC's calculations, to see unemploy- ment rise by half a million: 'A relatively hard landing for the economy would now appear to be becoming more of a policy objective than an accident.' For the British disease, the familiar cold-turkey treatment.
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