View from City Road: Treasury drops table and a hint

Treasury Kremlinologists will be amused by the latest sign that the mandarinate really does want a higher pound. The useful table in the Treasury's Pocket Data Bank that showed the level of the pound at the time of bank base rate changes over the last couple of years has disappeared, just as sterling lolloped back over the 80.4 (1985=100) at which it stood at the time of the last base rate cut on 26 January.

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.