The MT Diary: Howard Davies

Article excerpt

Hail an election year; Bank's bare mantelpiece; ghost of chancellors past; charity match.

It's election year. Probably. Let joy be unconfined. Hours and hours of perfectly balanced three-way analysis to look forward to. Synthetic Newsnight anger from Jeremy Paxperson. In-depth forensic interviews by John Humphrys with Teresa May. A new crop of party political broadcasts, confected by the finest ad agencies in the land - or at least in Soho. Mori poll upon Yougov survey will illuminate the enlightened, and sometimes the baser, self-interests of the electorate.

Perhaps you can hardly wait for the fun to begin. If so, you are unlike anyone I have talked to in recent weeks. They see this election as a match between a team that has done enough to lose and one that has not done enough to win. My team, Manchester City, gains such points as it does in games like this.

So it will almost certainly be three points to Tony and business as usual, as long as the economic sun continues to shine.

Which is more likely than not. UK interest rates have now been on hold for some time. Scribblers in the City have been fertile in generating explanations for this masterly inactivity at the Bank of England. Has the housing market finally turned? Is the Monetary Policy Committee anxious about the falling dollar?

If the commentators strolled down to Tate Britain on London's Millbank, they would find the correct answer. The 'Johns' show - not a lavatorial retrospective but a celebration of the careers of Augustus and Gwen - includes a magnificent portrait of Montague Norman. Norman was the governor of the Bank of England through the 1920s and '30s, whose tight monetary policy accentuated the Depression.

For years, Norman sat above the fireplace in the first-floor committee room at Threadneedle Street, exerting his baleful influence on the MPC, which meets there. But in September, Mervyn King generously lent the portrait to the Tate. Since then, the committee has been frozen, with no guidance available from above. The show finishes at Millbank quite soon, but is then going on a world tour (of Cardiff), so Norman will not be available for consultation until well into the summer. Expect no change in rates for the time being, therefore.

Nigel Lawson, who raised interest rates himself a time or two in the Treasury, was in match-winning form at the LSE the other day. The school has hosted a series of lectures from five surviving former Chancellors of the Exchequer, beginning with Denis Healey, on how economic policy changed during their time. Lawson spoke of his achievements in changing the consensus. The way he puts it is that before his time macro policy was seen to be about stimulating growth and micro policy about controlling inflation. …