Labour agrees with me, says Clarke

BY JOHN RENTOUL

Political Correspondent

Kenneth Clarke, the Chancellor, yesterday claimed that Labour has ceased to oppose his economic policies, in advance of Tony Blair's Mais lecture on economic policy today.

"I must be the first Chancellor who has a Shadow Chancellor who is not criticising what I am doing. Gordon Brown's problem is he thinks what I am doing is working. He has not for some time opposed anything I have done," he told BBC's On The Record.

"He knows it is working, he knows he could not do any better. He knows I have not persuaded the public of this yet, but he believes over the next two years this could get very worrying indeed."

In a speech at City University in London, Mr Blair will today reinforce Mr Brown's recently expressed "iron resolve" to be "tough on inflation and tough on the causes of inflation".

His words will be watched closely by City economists, who want to see how the Labour leader follows Mr Brown's suggestion last Wednesday that he was prepared to give the Bank "operational independence" - in other words allow it to decide the timing and size of interest rate changes, to meet an inflation target set by the Chancellor.

They will also study his words on Labour's attitude to a single European currency, for which new conditions have been set out in recent months by Robin Cook, shadow Foreign Secretary.

In his interview yesterday, Mr Clarke contradicted the Bank's forecast that inflation would be over 2.5 per cent by 1997, which is the Government's target. "If the British economy can carry on having a recovery of the strength that we have now, and in 1997 inflation is 3 per cent, or as I believe ... 2.5 per cent or below, that would be a fantastic performance compared with the British economy since the war."

But he played down their disagreement: "What the Governor of the Bank of England and the Chancellor currently have in common is we are confident we can deliver low inflation and we are both determined to do so. No two people ever agree, no two economists ever agree from one month to the next exactly what to do."

Meanwhile, media tycoon Rupert Murdoch continued to hold out the possibility of backing Tony Blair: "We'll have to find out what the difference is between Mr Blair and Mr Major before we make that decision," he told the BBC's Money Programme yesterday.