Letter: Even worse is to come until Britain learns to copy Europe's formula for success

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Sir: Central banks are, and have to be, integral parts of their country's economic and political culture. In your call for a (more) independent Bank of England ('The Threadneedle Street option'; leading article, 18 September), you recognise this by stating that:

The Bank would, like the Bundesbank, be obliged to support government policy: it could not divorce itself from the political environment, and it would have to be accountable to Parliament.

But the political and economic environment in Britain is profoundly inflationary; that in Germany is stolidly anti-inflationary.

It is true that the German government has at times overruled the Bundesbank (notably over the terms of Germany monetary reunification). But British commentators tend to overlook the anti-inflationary consensus of the German political establishment and of public opinion. It is this consensus that bars the German government from raping the Bundesbank.

In the United Kingdom, establishment opinion is divided on counter-inflationary strategy (as the joy of many industrialists at the devaluation shows); but so is opinion within the Bank of England. If the central bank itself is not fully committed to the goal of price stability at all costs, there is no chance that making it more independent will help to achieve that aim.

Yours faithfully,



Central Banking

London, W1

18 September