City & Business: Steady Eddie gives sterling service

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Eddie George, the Governor of the Bank of England, is not a man who is prone to smugness or complacency. Weaker individuals might have been prepared to take some satisfaction from last week's inflation data. Mr George is too responsible for that. He is also wise enough to appreciate that the battle against inflation is too complex to be judged on a week's evidence.

To illustrate my point I repeat three front page headlines from successive days in the Financial Times last week.

Tuesday: "Inflationary Pressures Stay Subdued".

Wednesday: "Inflation Leaps to 3.3% as Spending Pushes Up Prices".

Thursday: "Warning on Base Rates Despite Inflation Hopes".

What we are seeing here is an example of the mixed message which inflation always contrives to send out. It is either under or out of control, depending on your agenda.

The Government comes firmly into the "under control" camp. The 3.3 per cent level of inflation recorded in July was the highest for nearly two years and prompted soothing words from Treasury Minister Geoffrey Robinson that it would be back around the 2.5 per cent target level in the autumn. That is the kind of thing that Treasury ministers are employed to say these days.

Fortunately for them, they can say what they like with impunity given that the responsibility for meeting the inflation target has been placed fairly and squarely with the Bank of England.

The Bank has to be just a little more considered with its opinion given the consequences of misjudging the inflation outlook.

This explains the mixed message syndrome witnessed last week. The Bank cannot guarantee to bring inflation down to 2.5 per cent. All it can do is exercise the judgement it believes necessary to deliver that target in the medium term.

That judgement manifests itself in the shape of three base rate rises in as many months. Those rises have not always been popular, particularly among exporters which see increased rates as encouraging a strong pound. They are, however, critical if the fight against inflation is to be won.

I believe Mr George and his colleagues on the Bank's Monetary Policy Committee are on target to meet the inflation objective set by the Government. More encouraging, they will do this by paying more than lip service to the demands of exporters. For while Mr George has always maintained that interest rates should not be set with a target rate for the pound in mind, once again last week the Bank went out of its way to try and talk sterling down in a bid to ease the pressure on exporters.

Only a Bank headed by someone of Mr George's stature can hope to fight inflation and still marshal the progress of sterling. I am not going to say this again: Eddie George must stay.


My congratulations to the successful candidates who this week can boast of holding an A-level in Business Studies. They have every right to be proud. I can remember only too well the pressures, stresses and strains of the examination cycle. It is a tremendous achievement to emerge with sanity intact and a pass on the record card.

The popularity of Business Studies poses an intriguing question not just about the integrity of the A-level as an academic benchmark but about the message this has for the world of commerce at large. Some commentators have pointed out that traditional "academic" subjects are decreasing in popularity relative to the new subjects like Sports/PE studies and Media/Film/TV studies. Indeed Business Studies attracted more than 33,000 candidates this year, an increase of 14.6 per cent. Economics, meanwhile, saw a 15.1 per cent decline in the number of candidates, to just over 20,000.

Does this devalue the A-level, or does it reflect a changing society? I prefer to think it is the latter. I do not know what your average Business Studies syllabus contains, but I cannot believe it ignores basic economics. Perhaps all we are seeing is a shift away from pure economics to a more more broadly based introduction to the world of business.

Some argue this is a bad thing since future employers will be distinctly unimpressed by Business Studies students, preferring the more traditional Economics students for the plum job offers. This argument may be nothing other than a belief that the status quo must be maintained at all costs.

Personally, I have never known the A-level qualifications of anybody I have offered a job to. Nor, in the course of a number of different careers, has anyone inquired about my own A-level record.

My guess, then, is that a switch from Economics to Business Studies is not undermining the fabric of society. It may be producing students who move either to further education or directly into the labour market who have a much clearer grasp of a quite important aspect of the world in which they must live.

That grasp will ultimately work to the benefit of the commercial sector. The greater appreciation there is of the dynamics of the business world, the greater contribution our young people will be able to make.

In the past it has been too easy for students to dismiss business as dull and boring. Putting Business Studies on the A-level list does not make the subject more interesting, but it does highlight its importance.

At a time when there is still a shortage of management expertise, I believe the increase in the popularity of Business Studies is highly encouraging.

Close of play

When the mellifluous John Arlott retired from the Test Match Special radio team and left behind something which had given him so much pleasure and won him so many friends, he did so in a typically understated fashion.

I hope I can be forgiven for flattering by imitation.

After a few words from Richard Halstead it will be ... somebody else.