Treasury is considering public debate on Budget

Click to follow
The Independent Online
THE TREASURY is understood to be considering a future 'Green Budget' in which each year's Budget proposals would be open to public debate before they were firmly presented to Parliament.

The idea, unlikely to be put into practice until after Budget and spending plans are unified in December 1993, is part of the Treasury's proposals for a more open style of economic policy-making. The Treasury may also invite advice from outside economists to improve the computer model of the economy that it uses for official forecasts.

In the more immediate review of monetary policy following sterling's withdrawal from the ERM, the Treasury has also surveyed the way other leading industrial countries conduct monetary policy.

Although the impact of this review on the Chancellor's presentation of the Government's post-ERM policy is unclear, Norman Lamont will today disclose details of his new policy in a speech to the Conservative Party conference. It is hoped that his statement will stabilise the markets. The pound and shares recovered further ahead of the Chancellor's speech.

The Treasury's monetary policy review includes an examination of which measures of money supply growth are targeted by other countries, as well as the degree of independence of monetary authorities from political control. On Monday Mr Lamont is expected to give the Commons Treasury Committee a more detailed account of new money supply targets and inflation goals used as a guide to interest-rate decisions.

The pound meanwhile gained 1.64 pfennigs to close in London at DM2.4642, rallying for the second day in a row. Later in New York, sterling edged up to DM2.4800. Since hitting a low of DM2.3680 on Monday, sterling has recovered by 12 pfennigs.

Shares also gained, underpinned partly by hopes that Mr Lamont will announce a further cut in interest rates. The FT-SE 100 index ended 28.7 points higher at 2,517.1.

But the sentiment over lower rates was not shared in the money markets. Three-month interbank rates, which track the City's base-rate expectations, eased slightly from Tuesday's levels but still pointed to rates remaining unchanged from the current 9 per cent.

Sterling's recovery continued to be aided by easier German money market rates and growing indications that the US Federal Reserve is unlikely to cut rates before the November presidential elections.

Reimut Jochimsen, a member of the Bundesbank directorate, said on Tuesday night 'Public opinion at home and abroad has not yet taken account of the drop.'

(Graph omitted)

Comments