Wednesday 8th December 1982
Yet another run on £ and great pressure on interest rates
1000am 12 O/n [overnight], 115/8 7 day, 11 3 month
12.30 11¼ [Overnight], 11¼ [7 day], 1015/16
ER strengthens to 86.5 at 12.30
EG [Eddie George] said he would try to hold dealing rates at 10 and flood an additional £70m in market. It seems doubtful to me if we will hold BRates. Talked to Peter M [Peter Middleton] and suggested more money in 7 day end - it cannot do much harm
Donoghue, Harris, Forgan, lunch at CPS [Bernard Donoughue]
“now vicious circle high interest rates, low ER, increased inflation” - how to get out?
Some relaxation in the markets - money rates fell at close
107/8 1015/16 10¾ 10½ 1 year
and dealing rates held had at 10-101/8. The trick of feeding in £70mn seems to have worked.
Tax avoidance mtg - PM very gung ho - did not want to introduce “pernickety legislation” that would drive business away from UK - also “What would be effect on tax havens in Caribbean etc.” - would they want AID - she was concerned at too much leeway being given to the IR.
MS [Michael Scholar] suggested I was involved in the Ravenscraig evaluation - but Ravenscraig “costs” much more than the £30m a year to keep it open - it destroys credibility of the government.