Letter: A stable exchange rate is best

ACCORDING to Roger Bootle ('Industry needs help to make it', 6 December), what industry needs most is a competitive exchange rate.

If this means an exchange kept competitive by repeated devaluation as and when needed, this is a recipe for continuing economic mismanagement and instability, of which we have had more than our fair share. Like permanently low inflation, a stable exchange rate is best.

Nor is inflation - a monetary phenomenon - best restrained, as Mr Bootle suggests, by fiscal policy, though this obviously has a critical part to play. If industry is to be spared periodic runaway inflation and regular bouts of boom-bust, monetary policy needs to be conducted by an independent Bank of England mandated to maintain price stability at all stages of the electoral cycle. Which is what industry, and the rest of the economy, have been lacking since the Bank came under Treasury control in 1946.

Walter Grey

London N3