Chancellor moves to quell new fears of interest rate rise

WORRIES about a rise in British interest rates were played down by the Chancellor of the Exchequer, Kenneth Clarke, last night as he tried to minimise any disagreement with the Bank of England, writes Robert Chote.

The Chancellor told the annual dinner of the Confederation of British Industry in London that he and the Governor, Eddie George, had common aims.

'Agreement makes duller news than controversy but Eddie George and I share the same aim of low inflation and sound money,' he said. 'I decide, but we discuss and seek to agree. Steady Eddie meets canny Ken, if you like'.

The Chancellor's comments came on the eve of the publication of the minutes of last month's meeting between the Chancellor and the Governor at which they decided to leave rates unchanged. The markets will be looking closely for any indication that the Chancellor believes the next move in rates might be upward.

The Chancellor added that macro-economic policy was not enough on its own, and that it had to be accompanied by supply-side improvements. He said the focus for supply-side policy would be education and training, hinting at the forthcoming White Paper on competitiveness, postponed because of the death of John Smith.