CITY AND SUBURBAN
Touch of the sun, or Chancellor's dream of a surprise package
CHRISTOPIIER FILDES
Norman Lamont and I have been tak- ing the Italian sun, and I think it may have gone to our heads. There he reposes, a speck of pink on a rectangle of blue, set in the green of the Tuscan hills, with a jug of negronis by the poolside and his glass on the floating mat next to his hand. Peace at last, with the Treasury's grim portals far away? Yet he stirs and murmurs uneasily, and his musings, carried on a faint breeze, come in snatches to my ears. He seems to be worried about speeches. Four of them (he mutters) one after the other, like hur- dles, and what on earth am I going to say this time? The IMF comes first. Last year I told them all about Russia — never men- tioned the British economy — crafty, that, but I can't get away with it twice running. Then it's straight back to Brighton for the party conference. Green shoots of recov- ery'? They went down big in Blackpool, but if I dig them up again, the chaps will pelt me with grow-bags. An awful lot of our supporters have gone bust since then, and still do. And what about the home-owning democracy? The Bank of England says a million of these democrats are trapped in their houses, surrounded by a sea of debt. Wretched Bank, haven't their people got anything better to think about? I'm glad I set Tom Bingham on them: serve 'em right. Then comes the Mansion House, or wher- ever the Lord Mayor lives these days. How I hate that dinner, white tie and decora- tions, everybody's got more medals than me, and I have to get up and rattle through some dreary argument designed to squash Tim Congdon, which it doesn't — as if I cared. And then it's back to the House for the autumn statement, and what I forecast this year, and what I forecast in the Budget, and what nonsense it turned out to be, and why I shall run up a deficit of £35-odd bil- lion this year, and more next.
Old-fashioned crisis
ALL THAT'S the best that can happen. It assumes that everything goes our way, because I've got no room for manoeuvre at all. I just have to hope that those obstinate old squareheads in Frankfurt — hang on, I mustn't call them that, look what happened to Nick Ridley — I hope those splendid fel- lows at the Bundesbank don't put their rates up again. I hope Francis the Frog gets his referendum right. I hope the markets don't call my bluff on the pound. I always tell them that I'll put up our interest rates to defend it, and so far I haven't had to, but there's a first time for everything. Just look what happened when we tried to get a bit more out of National Savings! One whiff of grapeshot from the building societies, one threat of dearer home loans and we ran like rabbits. Could we really stand an old-fash- ioned crisis rate — bank base rates up 2 or 3 per cent, mortgage rates up with them, all in the sacred name of sterling and the ERM? I think that might finally kill the economy stone dead. The only comfort is, I wouldn't be there to find out, they'd kill me first — push me off the end of Brighton Pier and make sure I'd land on something sharp. I'm not sure I want to go back at all. I wonder if I could get a job here, teaching English as a foreign language, making my own olive oil . . .
Second barrel
ONE THING, though: I'm not going back to be stuck with a passive policy of hanging on and hoping, or can-carrying — the Sel- wyn Lloyd of the Major government, what a footnote to history! I've got to have a plan. Something to show them who's boss. Some- thing to deal with this ghastly business of interest rates, and ghastly gaping budget deficits too, tight monetary policy, lax fiscal policy — I say, these negronis are distinctly more-ish. Is there anything left in the jug? That's better. I know what, I'll have a pack- age. A credit-worthy package, A surprise package. Start on the fiscal side. Cuts. Real ones. Bang goes the European fighter air- craft, and the new Trident sub; we'll have a garden festival in Barrow-in-Furness to make up for it. No building tube lines to bail out property developers — good heav- ens, if we always had to do that, London would be one big worm-cast. Tolls on the motorways — they'll bring in money, and they'll make privately built toll roads eco- nomic, and then someone else can finance
them and I shan't have to. Now comes the sharp one — income tax. Twopence on the standard rate. On. Before they rush the platform, get them with the second barrel. We have been looking, I'll tell them, for the next Governor of the Bank of England, and I'm delighted to say that the post has been accepted by a most respected central banker, luckily available, delightful chap, gets his shoes made in London — Karl Otto Poehl. Robin retires with a peerage and the Garter; we re-label Eddie George chief executive; Congdon comes in as chief monetary adviser, that'll teach him. The new Gov runs the shop as he ran his old shop in Frankfurt, and forget what I said about that. He takes responsibility for mon- etary policy. Then, if it goes wrong, which it usually does, that's his fault and not mine — clever, eh? Just now it obviously Is wrong — far too tight, bank base rates still in double figures, desperate in a deep recession. So he hauls them down to 6 or 7 per cent. The mob rushing the platform work out that they save on their mortgages what they lose on their PAYE, and turn back. The ERM? I'm glad you asked me that, I shall say . .. We remain committed members of the European Monetary Sys- tem — it means damn all and sounds good but we are temporarily suspending ster- ling from the ERM. We'll put it back In when, you guessed it, the time is ripe. Actu- ally, the whole package looks so intensely respectable that it might help the pound. It would help the country. And me.
Lucky bounce
I SUPPOSE (murmurs the Chancellor, looking about him) the Italians are in the same boat. Prices in lire are jolly high, they can't be happy with the exchange rate . • • I see they've arrested that foreign minister, De Michelis — the usual thing, said to have got too close to the construction barons. Funny to think he started all this. He got cross with us when Italy had the European presidency, and we were supposed to have said that it was like being in a bus driven by the Marx Brothers. So he bounced Mar- garet at the Rome summit and sent every- one haring off into monetary union. Then she came back and blew off, and Geoffrey resigned, and one thing led to another, and John finished up at Number 10 and moved in next door. You never know your luck, but you can try to change it.
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