Letter: A crisis of more than exchange rates

Sir: If the object of the ERM is low inflationary, steady, 'German-style' growth, then merely sticking to a level for the pound was always going to be insufficient and ultimately ineffectual.

Monetary policy in Germany has been more a response to a successful economy than a cause. So, if Stormin' Norman and Major John want 'German-style' growth, they should import German-style cross shareholding, German-style technical training and education systems; German after-sales service, production and efficiency standards. The hard truth is that sticking to an exchange rate is much cheaper and less hassle. So, don't blame anything but the Government's shortsightedness for the boom-inflation-recession cycle we're once again facing.

In a quiet moment, I'm sure that even Lamont and Major would confess that Britain joined the ERM essentially because the Government could not trust itself to run the economy (more specifically its own anti-inflationary policies) anymore. If you want German growth, import the cause of that growth; don't just tie yourself to the Deutschmark, lie back and think of Frankfurt.

Yours sincerely,

DAVID MICHAEL

Capital Markets

Tokai Bank, London Branch

London, EC2

6 October