Letter: Case against freeing the Bank

Sir: It is Gavyn Davies who has missed the point. The fact that central bank independence is associated with lower inflation tells us nothing. Not all central banks are the same; not all economies - or banking systems - are the same.

It is non-metropolitan Britain's misfortune to have a financial sector which is chiefly oriented overseas (unlike Germany's), which is not integrated with industrial domestic capital (unlike Germany's), and whose interests are antithetical to the domestic economy (unlike Germany's).

Mr Davies works for an American bank situated "offshore" in the City of London . He can thus blithely write of the domestic manufacturing sector as "the one quarter of the economy which is directly affected by the exchange rate" and whose interests "cannot take precedence over the maintenance of the inflation target". But that one quarter earns more than 60 per cent of UK foreign exchange; and on its health rests the well-being of a considerable chunk of other, service sectors of the economy.

To sacrifice British manufacturing in the interests of an inflation target - which is what Mr Davies is advocating - is a recipe for disaster for non-metropolitan Britain.

ROBIN RAMSAY

Hull