The Chancellor and his officials are not keen to encourage new calls for another rate cut, and are happy to see the continued unwinding of some of the post-ERM devaluation. At one stage the pound was trading nearly 16 per cent below its September 16 level. Its recent recovery, abetted by enough green shoots to gladden a horticulturalist's heart, leaves it 11 per cent down but climbing.
The futures markets are still discounting another half a point off base rates, but not until September. At some point, though, even the Treasury must begin to wonder whether sterling's rebound should continue when Britain still faces a balance of payments deficit in a recession. The sustained growth of the whole economy depends on our export performance outpacing our insatiable appetite for imports.Reuse content