George's quip gives industry a headache a headache

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The Independent Online
THE GOVERNOR of the Bank of England, Eddie George, was in hot water again with the manufacturing industry last night after saying he could offer recession-hit firms nothing more than "an aspirin".

The remark, on the eve of the Bank's latest Monetary Policy Committee meeting to decide on interest rates, brought an angry response from manufacturers in the West Midlands.

The governor had been asked on BBC2's The Money Programme what his advice would be to a company, particularly one dealing with Asian economies that are in recession. He replied: "I have to tell you, there's not a lot I can do about that. I could seek to ease his pain but only by giving him an aspirin, and actually the underlying pain would be worse later on if I did."

Roger Dickens, president of the Birmingham Chamber of Commerce, said: "If that's all he did he wouldn't cause as much damage as he has done."

He said it was clear that the interest rate policy the MPC had pursued for the past 15 months had resulted in a strong pound, leaving manufacturing uncompetitive. He added: "It's a tough race we have to run out there and Eddie George has given us a bucket of sand to carry around while we're on it - it's crazy.".

Only four days earlier, the governor had visited the North East to build bridges with business leaders after having reportedly agreed that unemployment in the North was a price worth paying to curb inflation in the South.

Mr George refused to apologise for his remarks last autumn to a group of political editors from northern newspapers.

But he did say he regretted the damage done to morale in the region.

The two-day meeting of the MPC, which starts tomorrow and will be chaired by the governor, is expected to keep interest rates on hold at 5.5 per cent in response to signs of a strengthening in both the economy and general levels of business confidence. Last month, the Bank cut the rate by 0.5 of a percentage point.

Optimism increases

Business, page 13