Speaking at the Confederation of British Industry annual dinner, the Chancellor said Britain was working with European partners to make sure the euro was a success. "Our strategy to prepare and then decide is being pursued," he said.
Praising the Bank of England's Monetary Policy Committee, two years old this month, the Chancellor gave a clear warning on wage claims. "All of us must show responsibility on pay and not take the short-termist approach of paying ourselves more today at the cost of higher interest rates, fewer jobs and slower growth tomorrow," he said.
Hopes that interest rates may yet fall again were boosted as inflation fell below the government target and the Organisation for Economic Co- operation and Development (OECD) cut its forecast for UK growth this year.
The OECD predicted UK interest rates would fall to 4.5 per cent next year, and that the economy would grow 0.7 per cent this year, rising to 1.6 per cent in 2000. This reinforced the message in yesterday's inflation figures; headline inflation fell to 1.6 per cent in April from 2.1 per cent, its lowest since November 1993. Underlying inflation (excluding mortgage costs) fell to 2.4 per cent, below the Bank's 2.5 per cent target that Mr Brown reconfirmed last night.Reuse content