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Tory reaction 'predictable'

Wednesday 26 August 1992 18:02 EDT
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NORMAN LAMONT'S enforced statement on the steps of the Treasury, followed by the largest Bank of England intervention to support the pound since 1976, evoked predictable responses from the Tory backbenches.

Anti-ERM sentiments from critics such as Nicholas Budgen were dismissed as 'naive' by John Butterfill, vice-chairman of the Tory backbench finance committee. 'The US did exactly what some people here have been saying we should do - slash interest rates. That has been notably unsuccessful.' Mr Butterfill said leaving the ERM would mean higher interest rates at the end of the day.

Sir Teddy Taylor, MP for Southend East and chairman of the dissident Conservative European Reform Group, said Mr Lamont had put his future on the line with the statement, because 'if the Government is forced to move away from the present policies, his continuance in office will be virtually impossible'.

Tim Smith, the Tory vice-chairman and MP for Beaconsfield, said he believed most Tory backbenchers were behind Mr Lamont in his determination to defend the pound. 'They know that if we were to follow the alternatives, there is no guarantee whatever that we would be able cut interest rates. There is a huge run now on the dollar because of low interest rates - we simply couldn't countenance that in the UK.'

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