From Big Bang to City scandal

From the Lawson to the Clarke boom. The Independent's three former business editors and its present one chart 10 extraordinary years of experiment in economic management, the City and business, a period spanning the boom of the Lawson years, the deep recession of the early 1990s and the economic recovery of today. Never before has the world of business and economics so consistently hit the front pages. From Guinness to Barings, this has been 10 years to remember

The first front page of the Independent led with a story we had been hoarding for a week, praying that the international spy network of the Financial Times would not catch a whiff of it before Day One. This "revealed", as we journalists like to say, that the President of the Bundesbank had made a secret visit to Mrs Thatcher to try to persuade her to join the European Exchange Rate Mechanism.

It caused a gratifying little flutter in Downing Street, of the kind I was to experience less enjoyably from the other side of the tracks, as head of the prime minister's policy unit, just a few years later. There was even more gratifying irritation at the FT. Well, there you go - some stories just never seem to die. Ten years of the newspaper's life have reverberated with the politics of the pound.

But the echoes of 1986 that sound most strongly today have little to do with macro economics. They are on the micro side - what Nigel Lawson was, at the time, busy christening the supply-side revolution. The Independent was born on the crest of a wave of privatisation, deregulation, the breakdown of restrictive practices and trade barriers. The year 1986 was the annus mirabilis of supply-side reform. It was the year of Big Bang in the City; the height of the financial services revolution. It was the high tide of privatisation: Sid was about to buy his shares in British Gas; British Telecom had already left the public sector dock; electricity and water were on their way. Europe was launching its Single Market. Britain was leading the fight for the destruction of trade barriers between the countries of the European Community - and in the process signing up for a boost to Brussels powers that its prime minister, Margaret Thatcher, was to recoil from so spectacularly only four years later.

Back home, the very language of business changed. Deregulation and re- regulation added their own dictionary of acronyms. OFT begat Oftel, Ofgas, Ofwat and Offer - with the lottery and rail regulators still to come. We became familiar with RPI-X and Power Pools, with internal markets and new models of accountability.

It is no coincidence that London Economics, the economics consultancy whose chairmanship I am now taking over from John Kay, was also created in 1986 - and plunged instantly into the business of modelling and interpreting these new structures. Britain was in the vanguard of a number of structural reforms which required both government and the newly privatised utilities to think hard about the way markets work.

Only weeks after the Independent's own revolutionary beginnings, the City went Big Bang. The actual event was something of an anti-climax. Just as there were few prisoners left in the Bastille by the day it was stormed by the sans-culottes, so by 27 October 1986, all the big City firms had of course already made most of their dispositions.

Nevertheless, it marked the end of an era, and the start of a furious battle for market share, as the grand old mahogany panelling between brokers and jobbers came down and Chinese Walls between market-makers, fund managers and corporate finance departments (mostly) went up. (To our readers' evident relief, we charted their way through the new money maze by serialising Michael Brett's admirable new book, How to Read the Financial Pages. A decade later, I was delighted to discover that it is still required reading for graduate entrants to one of Britain's most distinguished merchant banks.)

The Independent itself was the product of a breakthrough in the long battle of attrition between newspaper publishers and printing unions. I was only one of a number of its business writers to have migrated from the Times. That newspaper's Murdoch management had formed the shock troops that broke the power of the Fleet Street printers, sweeping us to Wapping at the beginning of the year, where we produced the paper inside a barbed- wire encampment, surrounded by now-redundant strikers.

It was a brilliant campaign, but management was slow to appreciate that they would not be the only winners. Their victory broke down the barriers to entry into national newspaper production; the journalists they had tended to see as mere cannon fodder thereby gained the freedom to mount their own competitive challenge. In 1986, Britain was busy re-learning the meaning of markets - and in the newspaper business, the lesson was particularly sharp.

The Independent was a big start-up business, but not as big as it would have had to have been in the days when newspapers were obliged to employ their own printers. From the beginning three areas were seen to be crucial to our success: foreign; arts; and business coverage.

It was the age of the yuppie - our readers were young, affluent and concentrated in the South-east, though we had some clusters of loyal readership in Scotland and the North. Statistical correlations produced some curious pieces of information: if you slept under a duvet - still by no means universal in the mid-1980s - you were almost certain to be an Independent reader.

In our first year, we never lacked a story. It was boomtime - the economy grew 4 per cent in 1986, accelerating to nearly 5 per cent in 1988. Inflation was at its low point, the air was heady with confidence in the Thatcher "miracle", the budget was heading for surplus, Nigel Lawson was riding high. It was election time - Mrs Thatcher won her easiest victory in the summer of 1987, which did not stop Downing Street panicking halfway through the campaign. Massive political advertising boosted the newspaper's coffers that spring. On the final day of election week, the editor, Andreas Whittam- Smith, wrote a leader without a conclusion, asking each of three trusted lieutenants to write a paragraph in favour of each of the contesting parties.

I wrote one for the Tories, arguing that it would be dishonourable for the Independent, the direct beneficiary of Thatcherite reforms of the labour laws, without which it could never have come into being, to support anyone else. Others wrote equally passionately for Labour and the Liberals. The editor read all three - and ran the leader without a conclusion. With our readers almost exactly split between the three parties - more evenly than the readers of any other paper - it was probably the right market decision.

With the late Peter Jenkins, this newspaper achieved a reputation for political insight that could never be matched. But politics was not our only excitement. In the City, it was scandal time: it was a tremendous coup that David Brewerton broke the Guinness story in the Independent. It was crash time; when the bottom fell out of the stock market that autumn, my financial editor of the time, Peter Wilson-Smith, was able to work round the clock for days, and our flexible production techniques paid dividends. We led the revolution in newspaper graphics, charting the extraordinary global ripples of the crisis, pushing the limits of our edition times.

Time rose-tints memory. The exhaustion of launching a fully fledged daily newspaper, determined to compete with the best, is easily forgotten, although I know I never worked so hard again until I entered Downing Street. I remember the good times: putting together our Budget coverage (and boy, were there some Budgets in the late 1980s) with half the team and twice the effect - or so we believed - of the other broadsheets. I remember the special Wincott award for our pages - an early recognition of their quality. I remember the nervous moments too: we had our share of writs, notably from Maxwell, from whom I only wish we had earned more. Most alarming of all I remember sitting in the High Court watching Jeremy Warner, the present Business Editor, refuse to reveal his sources, praying that his lordship would not seek to make an example by banging him up.

I left the Independent in 1989, too weary to cope with the paper's second great gamble, launching a Sunday paper. But just days later, Nigel Lawson, Chancellor throughout my time with the newspaper, finally resigned - and I was honoured to return to write, I hope, a valedictory that did him justice. My final, very personal memory of the Independent, however, comes from the following year.

In 1990, sitting in my office at the Daily Telegraph, watching the wires as they reported the ins and outs of a reshuffle, I noted that my husband Douglas - then a junior minister at the DTI - had been called in to Number 10. I rang him to ask what had happened. "Oh, nothing," he said. "I was in there for something quite separate from the reshuffle."

Like a mug, I believed him. The following morning the Independent's lead story was that he had turned down the job of Paymaster-General, at the Treasury, because he felt I might feel obliged to resign as a financial journalist.

He had tried to keep this sacrifice to himself. Only when I threatened to ring the editor did he finally admit it was true. Had it not been for the Independent, I would never have known. The story - with a picture of Douglas in one of his now-famous hats - is my favourite press cutting of all.

Sarah Hogg is now chairman of London Economics.