LondonNet News Headlines
|Blair: No Devaluation
- PM to keep pound high
DESPITE yet another survey reporting on the export slump for British firms, Prime Minister Tony Blair is set to cling on to the strong pound policy that has seen trade dip further and further into the red in recent months.
"The worst thing to do would be to devalue the pound for short term effect," said a spokeswoman for the PM. "No one would benefit from a change of economic course." Blair is expected to flesh out his thoughts on the currency in a speech to the Confederation of British Industry tomorrow.
Blair was backed in his ultra-orthodox monetary stance by Trades Union chief John Monks, whose members have born the brunt of the government's high interest policy in terms of lost jobs, especially in the manufacturing sector. Monks decried devaluation as a worthless "magic wand."
The government makes much play of sticking to its 2.5 per cent inflation target as a reason to avoid both a cut in interest rates and a sell-off of sterling, but consistently fails to mention that that very target has been undercut but significant amounts for much of the past couple of years.
The result is increasingly clear, as the high profile troubles at Rover and Ford have shown: an overvalued currency equals overpriced exports, a point rammed home by a new CBI report that details a big drop in export demand.