Retail sales have risen in seven of the last nine months, to be nearly 2 per cent higher than a year earlier. Car production is more than 20 per cent higher than a year earlier, while car registrations are 7 per cent higher on the same basis. All this has occurred against a background of falling house prices, rising unemployment, collapsing consumer confidence and a relentlessly gloomy media.
The risk now must be that the Government has stimulated the economy too much, and inflationary pressures will begin to build again, with Ford's planned price increases acting as a timely reminder. All this may appear far-
fetched, but as was (re)discovered as recently as 1988/89, when interest rates were raised, the lags between monetary policy and economic activity are long and variable. As a consequence, there is little chance that the easing in economic policy that has taken place since sterling's departure from the ERM has had any impact on activity. (Not that consumer demand needs a further stimulus, the problem appears to be lack of supply, as both the monthly trade statistics and Sir John Harvey-
Jones continue to highlight.)
As Nigel Lawson wrote in 1962, '. . . the Treasury has never done anything too soon. Its actions fall into two categories, too little too late and too much too late.' It would then be somewhat ironic if the same fate befalls the Independent as the 364 economists.
Petts Wood, Kent
10 DecemberReuse content