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The committee of wimps is killing industry

The decision to raise the interest rate on Thursday exposes most of the monetary policy committee, the MPC, as wimps. They are normally referred to as hardliners, but the only real hardliner on the committee is DeAnne Julius who has consistently voted in favour of lower rates. If it weren't faintly sexist to say so, this column would declare Dr Julius its pin-up for 1999, and 1998 for that matter.

She will have appreciated the result of a survey among Midland businessmen which showed that 84 per cent of the sample disagree or strongly disagree with the statement that the Bank of England strongly supports the manufacturing sector.

No doubt the BoE will damn the sample as unscientific. So it may be, but the strength of the message is overpowering. British industry knows that, given a choice between being bold about growth in manufacturing and prudent about inflation, the MPC will chose prudence.

The MPC's statement on Thursday admits that the rate was raised to 5.25 per cent even though inflation is expected to remain below the short-term target of 2.5 per cent. The principal reason for the raise is "world demand", which might or might not be significant. The short-term consequence is that sterling is stronger against the dollar and the euro.There may be technical reasons for raising rates, but the more pressing case comes from farmers and manufacturers, whose slim margins are being squeezed again.

The BoE insists that this is a short-term decision which does not affect the long-term shift towards convergence with the euro zone. The trouble is that by the time we get to the long term, numerous farm enterprises, and businesses that make things, will be dead already.

A very docile bank

IN August there was evidence that the less said abut the euro, the stronger it gets. Last Wednesday, the Bundesbank's new president said the euro's rate against the dollar (then 1.05) was about right. Someone must have reminded him of the virtue of silence, as Herr Ernst Welteke then withdrew this remark. It was too late of course. But the European Central Bank does appear to be developing a nice line in docility. Wim Duisenberg, its president, said on Thursday: "You could say we are somewhat less active than other central banks." He must have been referring to the Bank of England's monetary policy committee. Let's hope the members were listening.

Horses for courses

THE trade in thoroughbred bloodstock is the most expensive luxury goods market of all, and the international price of horseflesh can be read as a useful leading indicator of the state of the world's economy. If this is so, last September's Newmarket sales suggested that the rich knew something about the economic recovery that the rest of us could only cross thumbs and hope for. The average price of the unraced, unbroken yearlings was 250,000 guineas of course - and the value of the sales was up by no less than 61 per cent over the previous year.

At the big sales in Keeneland, Kentucky, in July, sales values were up by 20.5 per cent. Anything like that at Tattersalls' Newmarket sale later this month will confirm the biggest boom in bloodstock sales since the heady days of the mid-Eighties - a world record price of $13.1m (pounds 8.1m) was set at Keeneland. The English native record is 3 million guineas. Now the names to reckon with are an Irish syndicate, and the Princes Maktoum from Dubai.The influential horse is called Saddler's Wells, which goes about his business at the Coolmore Stud in Ireland, covering upward of 120 mares each year at 125,000 guineas a pop.

The charm of the horseflesh market is that it welcomes anyone with more money to spend than they know what to do with. One of the newly declared runners is an Indian-born magnate who lives in Florida called Satish Sanan. In earlier booms, new players in the market were oilmen (like Bunker Hunt) or tanker owners (Stavros Niarchos). Sanan is in computers. (Here is some information for commodity market specialists: having bankrupted himself buying silver in 1980, Bunker Hunt is finally back in the bloodstock business, having bought 30 yearlings in July.)

Although prices are forbidding, the market in horseflesh is no different from any other. Professionals such as John Magnier and Michael Tabor of the Irish syndicate tend to feast on the fortunes of new men like Sanan. But we are looking at racehorses more as an indicator than a profit centre, especially as we know the MPC finds it difficult to evaluate inflation indicators. Come to think of it, though, if they rely on the horses, the rate might leap to 6.25 per cent, and that would be a very bad bet.

Oh, Brothers

THE TUC congresses in Brighton this week. No, please do not turn the page. Just recall how conscious, anxious even, you would have been 20 years ago of the trade unions getting together to composite their motions and flex their muscles, when there were 12 million affiliated members. At that time, a cocky, wildly ambitious and oddly charming trade union leader called Clive Jenkins informed me that by the end of the century trade union power would be the bottom line in British politics. Margaret Thatcher thought not, and, two decades later, the TUC has finally halted a seemingly inexorable decline in membership at 6.7 million.

All those years ago there would have been thousands of angry words spoken about two matters that arose last week: the threat to close part of the Selby coalfield, and the Government's refusal to include white-collar workers in the EU working hours directive, which says we should not be made to work more than 48 hours a week. Arthur Scargill, the miners' leader who did more than any single man to torpedo the power of the unions, will be in Brighton this week, but no one will listen to him. As for working hours, all the TUC can think of is an appeal to the bureaucrats in Brussels in the hope that they can wield the power the unions have lost.

Powerful trade unionists like George Woodcock, Frank Cousins and Bill Carron must be turning in their graves, but it would be wise not to dance on those graves. What has happened in the past 20 years proves that nothing is for ever.