Britain, home to Europe's strongest currency, with the lowest inflation, low interest rates, steady growth and a thriving economy. Fanciful? - with core inflation down to 3.8%, the pound moving ahead, and the British strike record the best ever, we could become a new Switzerland.
But before Britzerland can become a reality, fundamental changes are needed. Interest rates at 10% are uncomfortably high but by the end of the year, if foreign investors remain enamoured of Britain as a bastion of centre-right, stable government, they could fall below German rates. And suppose we could unrelentingly force inflation to zero. Foreign investors would be even more eager, pushing sterling higher and forcing interest rates down; we would have enormous economic clout in Europe and immeasurably strengthen the case for the European central bank to be in London.
But, in the current recession, every point reduction in inflation has "cost" roughly 200,000 jobs. Driving it down to zero might make the government shy from the consequences. Unless, of course, they resurrected one of those policies, devised in the '60s and '70s and despised in the '80s, as a possible solution: a wage freeze.
Before readers recalling visions of the Jones Scanlon pacts, Prices and Incomes Boards and the like, have apoplexy, let us count its merits. In Ireland and France, similar radical measures reduced inflation sharply and enormously improved competitiveness. Could it work in 1992 Britain? Well a Major government, committed to a classless Britain and consensus stands a better chance of achieving national co-operation on a freeze than a confrontational Thatcher regime. There are signs that reality is coming through to pay bargaining. British Aerospace managers were recently told their pay was to be frozen. Awards in some of the more competitive industries are now below inflation. Even directors and managers are pulling in their belts. A recent P-E International study found that British managers' awards had halved in the last year to 5.5%.
The key players would be directors and, more importantly, the unions. Company directors (plus senior civil servants, ministers and the like) would have to set an example by freezing their pay. The Government might use the honours system as a carrot and government contracts as a stick to beat reluctant company bosses into line. As for the unions, rapidly losing their influence in the Labour Party, despairing of ever seeing a Labour government, and facing further legislation which could cut a million members from their ranks, perhaps it is time to flatter and woo them, to bring back the beer and sandwiches at Number 10. Consultation might produce an agreement that allows increases only to be matched by productivity rises. Above all, promise the unions a change in the reporting of public sector finances to distinguishing between capital and current spending. Any savings made via a freeze in public pay would be put into capital spending projects (training would count as capital spending) to boost employment.
And why not a dividend freeze, which would dismay the City but allow long-suffering companies the perfect excuse to divert scarce funds to investment. If the Major government could pull this off it would gain the gratitude of the unemployed who could be returned to work in increasing numbers. Then they could break out the Bolinger and caviar in Number 10 rather than beer and sandwiches. Brizerland would beckon.