Friday 27th February 1981
Biffen reported to give big hint in Press that MLR [Minimum lending rate] was to be cut by 3% (In rest of press reports of 4% are rampant). Middleton, writing budget speech, very surprised - argument whether it should be 1% or 2%. Middleton finding it very difficult with no Rooker Wise, a PSBR estimate rising by the hour, the Governor requiring no money targets but great emphasis on exchange rate - apparently GH [SirGeoffrey Howe] did not stand up to the Govr at all well. I told Middleton that I thought still that this budget had all the seeds of disaster, but a lot had been done on the macro level. But no RW [Rooker Wise] and Bank tax were not defensible. The objection to a standard rate increase is wholly political.