Budget message cold comfort for business

THE stockmarket may have loved it - possibly as much for what was not said as for what was said - but did Hamish Macleod's second Budget speech really give very much comfort to the rest of the business community? Certainly not, if you fear that inflation is still Public Enemy Number One. For even if you do not accept the arguments that his plans are inflationary, you have to accept that the Financial Secretary made no attempt to tackle the issue either.

Of course, Mr Macleod talked at length about the problem, the reasons for it and the constraints which prevent him from taking effective action to cure it.

And he was very persuasive when he implied that the cost of seriously tackling inflation might result in the same threat of bankruptcies, unemployment and stagnant incomes that we have seen in many of the developed economies of the West.

But there was precious little to suggest any new initiatives were even being contemplated by the Government.

Most of the blame for this falls, yet again, on the Government's commitment to the existing linked exchange rate. Inflation, sadly, is still being looked upon as the acceptable cost of maintaining currency stability through the peg.

And while the Financial Secretary pointed out that our role as an exporter of manufactured goods has been shielded by the transfer of production across the border, the more important service sector not only lacks that flexibility but also suffers correspondingly more from the inflation it cannot escape.