Pitman isolated on rate rise

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The Independent Online
BUSINESS leaders this weekend gave the overwhelming thumbs down to Sir Brian Pitman, the Lloyds Bank chief executive who last week signalled strongly that the Government should lift interest rates.

A straw poll of industrialists and financiers puts Sir Brian, who forcefully argued that the Government was not doing enough to curb inflation, in a minority of one.

Sir Paul Nicholson, chairman of the Sunderland brewing group Vaux, said: "I do not think it would be right to put up interest rates. It would be a shattering blow to confidence in a very weak market." There had already been a slowdown in the Northern economy over the last two to three months, he argued. "Life is getting tougher again."

Chris Haskins, chairman of Northern Foods, strongly resisted Sir Brian's reasoning: "Some people are taking the threat of inflation too seriously. I would hold on, I wouldn't put them up. If anything, I'd bring them down." He said demand was already so weak that Northern was unable to pass on raw material price increases. David Prosser, group chief executive of the insurance group Legal & General, comented: "I do not have much sympathy with Sir Brian's view. We still need to go on rebuilding consumer confidence." He said there needed to be a recovery, though not a boom, in the housing market.

Robert Brace, finance director of British Telecom, echoed the feelings of many who are already experiencing a marked slowdown. "We've seen a dampening in growth of consumer demand since Christmas. Any increase in short-term interest rates would be likely to worsen that."

John Roberts, chief executive at regional electricity company Manweb, urged against a hike, saying that worldwide rates look to be softening. "I wouldn't like to see us going against that trend."

The chorus against a rise in rates follows Sir Brian's attack on anti- inflation policy on Friday. He was acutely concerned that inflation had risen above 3 per cent and was continuing to rise. "I certainly haven't seen quite as much action as I would have liked to keep it down," he said.

The markets, at least, support Sir Brian. The short sterling futures contract reflects the view that there will be a quarter-point rise in rates by the year end.