Letter: Strategy to end British blight
Your support helps us to tell the story
This election is still a dead heat, according to most polls. In a fight with such wafer-thin margins, we need reporters on the ground talking to the people Trump and Harris are courting. Your support allows us to keep sending journalists to the story.
The Independent is trusted by 27 million Americans from across the entire political spectrum every month. Unlike many other quality news outlets, we choose not to lock you out of our reporting and analysis with paywalls. But quality journalism must still be paid for.
Help us keep bring these critical stories to light. Your support makes all the difference.
Sir: Devaluationists such as M. R. Weale (Letters, 26 August) argue that the pound is 'probably' too high.
He only offers in evidence the trade deficit during a slump and thinks that a 10 per cent devaluation would put us right. He and others like him ignore the drop in wage awards from 9 per cent to 4 per cent since we joined the European exchange rate mechanism (ERM); the first time those round the bargaining table have recognised that they are negotiating in a hard currency.
If we throw this hard-won credibility away by devaluation, we will take years to regain it. And, since it lowers industrial costs by 5 per cent, we have already gone halfway to the alleged 10 per cent overvaluation, but without the increase in import prices that would restart the wage-price spiral.
But the present pressure on the pound and the unacceptable level of interest rates shows that the ERM is not enough. The ERM is overdependent on the mark and the Germans have decided to finance unemployment pay in the five new Lander by borrowing and not by taxes. That is why we need the Economic and Monetary Union that the Maastricht treaty proposes.
We have a special problem because we have never recovered the share of industrial capacity that we lost when the pound really was overvalued in the early Eighties. That is why we above all need a stable and credible currency as a basis for industrial investment.
In my three decades of public life, Britain has been blighted by the wage-price spiral and short- term economic policies. Now, for the first time, we have a long-term strategy that should put us
on level terms, and even if the French send us back to the drawing board, that is still the strong British interest.
Fortunately, we have a government that has just been elected and which is going to stick to its guns.
Yours faithfully,
FRED CATHERWOOD
MEP for Cambridge and
North Bedfordshire (Con)
26 August
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments