Letter: No devaluation call

Mr Howard Davies
Wednesday 22 July 1992 23:02 BST
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Sir: In 'Signs of recovery for the greater good' (22 July), Hamish McRae lists me among those who have called for devaluation of the pound. Neither I, nor any other CBI spokesman, has called for devaluation. What I have said is that our interest rates are higher than we need to make further progress towards domestic inflation targets. Therefore there is a case for looking at concerted action at European level to reduce interest rates.

High German rates are creating difficulties for the UK, and for other European economies. It is surely reasonable to point this out, and to make the case for a different mix of fiscal and monetary policies in Germany, and perhaps elsewhere in Europe, which could help to bring forward economic recovery. But the CBI's commitment to UK membership of the exchange rate mechanism is firm.

Yours faithfully,

HOWARD DAVIES

Director-General

Confederation of British Industry

London, WC1

22 July

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