In August of last year, I hinted on this blog that interest rates might be reaching levels that were threatening economic growth. The Bank of England's Monetary Policy Committee (MPC) is required to hit an inflation target, and it moves interest rates in order to hit that target as closely as possible. But it is not required to aim for any particular rate of economic growth. We are now seeing the effect that policies that are suited for one purpose can have on another key indicator of macroeconomic performance.

The Chancellor of the Exchequer has slashed his growth forecast for 2005 to 1.75%, just half the rate that he forecast just a few months ago in the Budget. He blames this in part on oil prices - though oil prices have affected also the economies of mainland Europe that are now growing faster than that of the UK. The UK's own monetary policies - the responsibility for which is now of course (quite rightly) devolved to the Bank of England - have as much to do with this year's disappointing growth outturn as anything else.

Fortunately, the UK economy looks set for a soft landing, with growth remaining uninterrupted into another cycle. In the longer term, the relationship between the MPC target and other key macroeconomic variables is something that may need to be revisited if we are to avoid less fortunate economic outcomes.

Gordon Brown is at it again - he has once again changed his definition of the economic cycle. A few months ago, he redefined the start of the current cycle from 1999 to 1997, a controversial move on which I have written earlier. Now he wishes to redefine the end of the cycle to 2007.

This latest move is truly bizzare. He has described, with some justification, the current year as 'the toughest year'. If that is the case, then surely this is when the cycle ends. The move to redefine the end of the cycle to 2007 is transparently a ploy to boost the public finances with the fruits of a couple of years of above par growth. There's nothing particularly wrong about that, but the Chancellor should stop pretending that he is adhering to some sort of 'golden rule' when the truth is that he keeps moving the goalposts.

In his pre-budget statement, the Chancellor has revised growth forecasts for the current year down to 1.75 per cent. This is just half the growth rate he was predicting at the time of the Budget earlier this year. To be sure, some of the slowdown is due to rising oil prices, but they affect the relatively fast-growing economies of mainland Europe too. More pertinently, the slowdown is due in part to restrictive monetary policies. Back in August of last year, I was hinting on this blog that interest rates might have been hiked too far and too fast. We are now seeing the fruits of the Monetary Policy Committee's decisions of 15 months ago - while those decisions were arguably in line with the MPC's need to meet an inflation target, we are now seeing the consequences of their decisions on economic growth, an important variable which the MPC does not target.

Tony Blair is making last ditch attempts to secure agreement on the EU budget. He says that there is no question of the UK giving up its rebate, other than in exchange for wholesale reform of agricultural support. Yet he is willing to see the rebate reduced (as opposed to scrapped) in order to secure an agreement - and this without any corresponding cut in support to other countries through the Common Agricultural Policy (CAP).

The desire to seek a deal during the period of Britain's presidency of the EU (which ends at the end of this month) is natural enough. But Mr Blair has left it until the eleventh hour before making any strenuous efforts in this direction. The consequence is that he has had to offer up a key bargaining chip in order to secure the support of the eastern European accession countries. They may be (and it is only a maybe) willing to cut some of their calls on the EU budget for development if the UK is willing to sacrifice something too. So - since the UK has the presidency and since Mr Blair can make decisions for Britain but not for other western European countries - the UK offers up a slice of its rebate.

This is politics liberated from any economic rationale. The UK's rebate was set up to ensure that - so long as the CAP existed and distorted budgets - the UK got a fair deal in relation to other western European countries. If there is no change in budgetary arrangements for the other western European countries, the rebate should remain intact. It is doubly important that it should do so, since the rebate serves as Britain's only pressure point on other countries to reform the CAP. Mr Blair is playing dice with our ability ever to cure Europe of its most damaging institution - one that penalises consumers, hurts farmers in developing countries, and sustains inefficient agricultural practices within Europe.

Mr Blair's offer seems to be to cut the rebate by about half a billion pounds per year. At a time when his Chancellor, Gordon Brown, is struggling to plug the hole in the public finances, the Prime Minister's largesse could not be more unwelcome.

Gordon Brown is in the news again. It seems that he is intent on blocking one of the proposals made in the forthcoming Turner report on pensions reform. That proposal would reinstate the automatic link between pensions and the average earnings index, and would (eventually) raise the age at which people become eligible for the state pension to 67 years.

This is another example of a knot in which the Chancellor has managed to get tied. Index linking of pensions obviously reduces the degree of control that he has over public expenditure. He needs to rein in that expenditure as far as possible at present, because tax revenues are currently falling quite a long way behind expenditures. In other words, the public finances are in a mess, and the Chancellor is in no mood to sign cheques. The shortfall of tax revenues was predictable and predicted.

Most economic commentators have been less sanguine than the Chancellor about the propspects for growth over the last couple of years; they, not he, turned out to be right, and the consequence has been that incomes have failed to rise sufficiently quickly to fill the Treasury's coffers.

Mr Brown owes economists an apology. But before that, he should apologise also to the pensioners and the public sector workers who will pay the price for his mistake.

Gordon Brown, Chancellor of the Exchequer, has urged public sector pay review bodies to keep pay settlements down below 2% over the coming year. This is in spite of the fact that price inflation has been above 2% for several months now.

He is right. The recent surge in inflation has been a blip, fuelled largely by the increase in oil prices. Over the last couple of months, however, oil prices have fallen, and so has inflation. Last month's inflation rate (excluding mortgage interest) was 2.3%, down from 2.5% the month before. To allow high settlements in the coming pay round would risk perpetuating the blip in the same way that the oil price blip of the 1970s was perpetuated. Then, inflation rates rose to 28%, an experience we would rather avoid repeating.

However, there is also a more cynical reason why Mr Brown would like to see public sector pay restraint. Owing to his overoptimistic growth forecasts, tax revenues are lower than he expected. As a result, there is a gaping hole in the public finances. High public sector wage settlements would aggravate this situation.

While Mr Brown is right to urge for pay restraint, it is nonetheless the case that public sector workers are being expected to pay for the Chancellor's own lack of prudence.

There is a lot of public pressure on the UK government to respond to the petrol price situation by lowering duty on fuel. While all parties in the discussion understand that it is international factors that have pushed up the price of petrol, there is much disquiet about the fact that the government's tax take on petrol has risen - because while the duty is a fixed sum, VAT is raised as a percentage. There are therefore accusations that the government has allowed the VAT windfall arising out of the petrol price hike as a kind of stealth tax. This is what is causing people to call for a reduction in the rate of duty.

Should the government respond? I think not. If they did, it would signal to the petrol producers that they are prepared to absorb (in the form of a reduced tax take) any further increases in the price at which the petrol is sold to the garages. This would insulate the petrol producers from the disciplines of the market - and the profits made by the petrol giants do not suggest that their industry is sufficiently cut-throat to ensure that Shell, BP and the rest will discipline each other through competition. (Shell and BP each make annual profits that are roughly the same as the national incomes of countries like Estonia, Cyprus, Lebanon or Botswana; about twice as much as the national income of Niger.)

If government cut duties, petrol companies would likely hike prices again.

The root cause of the current difficulty in the petrol market is high demand (much of it speculative) and OPEC-restricted supply. The high demand is something we're going to have to learn to live with. The artifical restriction of supply by the OPEC cartel is likely to continue for a while yet, although political pressure in advance of the OPEC meeting on 19 September could possibly bring about some easing of the situation. Eventually - as happened in the 1970s - the cartel will find the maintenance of high prices unsustainable, but that could take some time.

The petrol price protesters are out in force again. Oil prices have pushed the pump price to an unprecedented £1 per litre in the UK. In a country where travel by car has become the norm, the rapid price increase has understandably made many people unhappy.

Demand for oil is forecast to rise dramatically over the next few years, as the rapid pace of development in the large high growth economies of China and India brings motorised transport within the budget of many more people. With some forecasters predicting a rise in the per barrel price of oil to over $100 within two years, it is hardly surprising that the demand has increased now, when prices are 'only' $57.

To be sure, the high price is being sustained by the behaviour of the OPEC cartel, which is restricting output to around 28 million barrels per day. While prices are on the rise, discipline within the cartel is likely to be maintained; members of the cartel will recognise that they are better off not breaking the output quotas agreed within the organisation just yet. (Or at least not breaking them too wildly - OPEC recognises that its members do in fact break the rules.) The cartel is the real reason why output is restricted. Of course oil supplies are not infinite, but it's cartelisation rather than limited supplies that is the immediate problem. OPEC will be meeting on 19 September to review its quotas; we can expect there to be a lot of international pressure on them to increase supplies in order to dampen the upward pressure on prices.

In the 1970s, restrictive practices by OPEC brought about inflation on a grand scale in the UK. That happened because the government of the day 'accommodated' the oil price rise by relaxing monetary policy. That led to a general and sustained increase in prices - inflation. So long as today's authorities keep a tight rein on monetary policy, there is no reason why that episode should be repeated. But it does make it likely that the interest rate will need to be increased in the near future.

The European Union's dispute with China about textile imports comes like a blast from an unwelcome past. It exhibits the EU at its worst.

At its best, the EU exists to promote free trade - albeit free trade within a prescribed trading bloc. Free trade encourages the most efficient international pattern of production possible. If we are best off when France produces wine and Italy produces pasta, then that is exactly what free trade will stimulate. We will get relatively cheap wine from France and relatively cheap pasta from Italy, and - given an amount of money to spend - we'll be able to buy more wine and pasta than we could under any other production arrangement.

In the case that is now making the headlines, China wants to sell the EU cheap textiles. I say let them. The EU says no. The EU is concerned about European jobs in the textile industry, and is imposing protectionist policies to prevent what they consider to be excessive textile imports from a low cost producer. But why not let China do what it is good at, and let us concentrate on producing things where we have a comparative advantage?

For some textile workers in the EU, this might mean adjustment. It might mean reskilling, either to move up the value chain in the textile industry, or to move out of the textile industry altogether. Change hurts, and that being so, the EU is resisting the change. But change is also inevitable, and if EU labour markets do not act flexibly now, they will be forced to do so, more painfully, later.

Meanwhile, the EU is seeking to deny hundreds of millions of European consumers the right to choose between cheap imported textiles and more expensive domestically produced goods.

And all the time the tide keeps rolling in, and the EU still needs to learn from the experience of King Cnut.

China has unpegged its currency from the US dollar, and has revalued the renmimbi by 2%. This will make its exports less competitive, and will make it easier for other countries to export their goods to China. The Chinese currency will now float against other currencies, but the float will be managed by reference to a basket of currencies of its major trading partners. This lessens the influence of the (relatively weak) dollar in determining China's trade.

Inflation in China remains low, at below 2%, and growth has eased somewhat from the supercharged 13% figures of a few months back. Domestic pressure for the change in policy is unlikely to have been the driver, therefore. But the Chinese government has come under increasing pressure from other countries to free its currency. Notably, the US, with which China has a huge trade surplus, has been especially keen to gain leverage from the extra degree of freedom that independent exchange rates for the two giant countries can afford. For Americans (as for Brits, and as for China's other trading partners) the move may make flashdrives slightly more expensive, but will it will stimulate their economies. This is welcome news.

Chancellor of the Exchequer, Gordon Brown, has a reputation for prudence, won largely as the result of his careful management of the economy during the Labour government's first period in power. Since then he has been more relaxed about spending, and the government budget surpluses earned in the early years have turned into deficit. Key to his prudent image has been his self-imposed 'golden rule' that, over the course of the business cycle, government should not borrow other than to pay for capital investments.

During the current cycle that golden rule looks like being breached. Or at least it did until the Chancellor employed a sleight of hand to give himself more wiggle room. That sleight of hand entailed redefining the time when the current cycle started from 1999 to 1997. Since the government made a surplus in 1998, this gives him more to play with.

Certainly the case for stating that the cycle began in 1999 always looked weak. Growth was much higher then than in 1997. So far so good for the Chancellor. But if we roll the years forward to 2000, things don't look so compelling. In that year, growth dipped once more, and indeed on some measures growth was slower in 2000 than in 1997. The Chancellor was right to change the date that the cycle began. But he still hasn't got the right date.

Since the years after 2000 have been characterised by government budget deficits, the truth of the matter is that the golden rule is being broken in style. Fortunately this has not yet led to inflationary pressure, but it does build up problems for the future. Taxes will need to rise to pay for the excess government spending, and if people anticipate those tax rises they will be cautious about their own spending now. Consumer pessimism dampens demand and stifles growth, making it all the harder for the Chancellor to meet his targets. Unless he starts to pull rabbits out of hats (without a sleight of hand this time), the Chancellor's reputation for prudence is set to wane.

I have, for decades, been a supporter of Christian Aid, both through regular donations and as a door-to-door collector. I have, however, been appalled by half page advertisements placed by the charity in today's newspapers. They exhibit a dreadful level of economic ignorance.

The advertisments argue against free trade and in favour of 'fair trade'. They cite the particular case of onion farmers in developing countries whose output is priced out by cheap imports from Europe. Let's disentangle that example.

Suppose trade is free. European farmers could price out farmers in developing countries only if they could produce onions more cheaply. If this is the case, then people in developing countries should consume the European onions, and be grateful that their own farmers can then be freed to produce something else - something that they are better (in relative terms) than the Europeans at producing. That way everyone gains - in the developing countries they get cheap onions and their farmers can switch to producing something that earns them more income. This is the principle known to economists as comparative advantage, and it supports the argument in favour of free trade. To be sure, the transition of switching from producing one thing to producing another can be painful, but it is a transition that has to be made sooner or later - as countries as diverse as the UK and the USSR discovered during the 1980s, you can't buck the market forever.

There is another possiblility. Maybe trade isn't actually free at the moment. Maybe European farmers are dumping cheap onions onto foreign markets. This might happen if they seek to sell their onions in Europe at prices above the level that would clear the market. To achieve this, they would have to restrict supply to Europe by selling cheaply abroad. This certainly would not be fair trade, and if this is happening, Christian Aid would be right to oppose it. But by the same token, this is not free trade either.

I regret to say that Christian Aid has got it very wrong. They should be arguing for, not against, free trade. Free trade is fair trade.

The Conservative party has today published its proposals for the funding of higher education in the UK. The proposals involve the scrapping of all tuition fees, and an increase in the interest rate paid by students on student loans. Students will gain from the former and lose from the latter, but on average will be better off.

By scrapping tuition fees, universities and colleges will be denied an important source of income. To alleviate this, the Conservative proposals include an intention to hand over to the higher education institutions themselves the claims on student debt. The universities and colleges could then sell this debt to financial institutions, releasing funds that can be spent now to alleviate the funding crisis in higher education.

These proposals raise a couple of interesting issues. First, if universities and colleges are given the authority to claim back student debt, it is not at all clear that they would be able to do so through the income tax system. The innovation of income-contingent loans was one of the most attractive features of the reforms ushered in in the wake of the 1997 Dearing Report. If loan repayments are not contingent on income, a return to mortgage type loans would be very hard on graduates who fail to get high paying jobs, and on those who interrupt their careers for family reasons. Presumably it would be possible for the universities collectively to subcontract the loan repayment process to the government tax collectors, but it is not clear that this is what the Conservatives have in mind.

Secondly, while it is clear that the Conservatives wish to allow the universities and colleges to receive loan repayments from students, it is not clear where the money to make the loans will come from in the first place. If the government makes the loans (as now), it will need to find the money to do so. If the higher education institutions make the loans (and one wonders whether this might be the hidden agenda), then it is not clear that the new proposals will do anything at all to solve the higher education funding crisis. There seems to be some alchemy at work here, a black hole at the heart of the proposals.

The higher education sector faces a funding gap of between £6 billion and £10 billion per year. If we want an effective higher education sector, that gap has to be plugged. Alchemy will not plug it, and it seems that the introduction of differential tuition fees remains the only really persuasive and honest proposal in town.

Interest rates are up again today, to 4.75%. This is the fifth hike in the last 8 months, and suggests continuing concern in the Bank of England about inflationary tendencies in the UK economy.

The latest figure (for quarter 2, 2004) for the annual rate of growth of real GDP is 3.7% (up from 3.4% in the first quarter). As a measure of unemployment, the claimant count is still falling, and has been below 900000 throughout 2004. These are both signs of a buoyant economy.

The continuing rise in house prices, and concerns raised by the high price of oil, have generated some concern about inflation. But the former should be self-correcting and the latter should be a one-shot event.

The annualised rate of growth of the consumer price index rose during the second quarter of the year - from 1.1% in March to 1.6% in June. This remains low in relation to the target level, and in this respect it is surprising to witness the sustained hikes in interest rates; it seems to be a severe policy response.

There is, however, reason underpinning the Bank's policy reaction. Over the year to June 2004, lending to individuals increased by some 15%. Much of this is due to house purchases, but growth in consumer credit has also been dramatic, at around 12%. These figures suggest that, unless credit is reined back by rising interest rates, aggregate demand will outstrip supply and inflation will set in. The Bank's decisions on interest rates may therefore be seen as a response to a useful leading indicator of economic activity; rather than responding to what inflation is now, the Monetary Policy Committee is responding to where inflation might be in a few months time.

As things stand, this carries a danger. We might reasonably expect the housing market to self-correct, and we might also expect this to involve quite a substantial fall in the price of a typical house. If this happens while interest rates are still being hiked, consumers will face a double-whammy - house price collapse and high interest rates. Certainly the economy may need to be slowed down in the months ahead. But the housing market may ensure that it does some of the slowing down of its own accord - interest rates are not the only thing that can brake the economy. The MPC needs to toe a very thin line between doing too little and too much. The signs are that it has done enough for the time being.

The increase in oil prices (to over $40 per barrel) has caused much concern. Political instability in Iraq and Saudi Arabia are largely the cause, with the price of oil futures in particular being lifted as a consequence of the risk factors involved, fear of a cutback in supplies generating worries about future price hikes. Inevitably this stimulates memories of the 1970s, when OPEC, the cartel of major oil producing countries, succeeded in quadrupling oil prices. At that time, the price rises were accommodated by expansionary monetary policies in many Western economies, this fuelling inflation. Cartels are notoriously unstable, however, and it does not appear that this time around OPEC will be able to exacerbate the high price of oil - indeed major players within OPEC are committing themselves to raising supply, thereby dampening the upward pressures on the price.

Oil prices are critical determinants of the prices of many other things, owing to the importance of oil as a fuel for transporting goods. So oil prices matter. But a one-shot increase in the price of oil is not, of itself, inflationary. It does not set off a sustained chain reaction of price increases. In the 1970s, however, governments' responses to the OPEC oil price hike did set off an inflationary episode. At that time, governments reaction to the increase in the price of oil was to expand the monetary base so as to accommodate the oil price shock, that is to try to dampen the decrease in aggregate demand that is consequent to the one-shot price rise. But by expanding the money supply, the authorities merely generated further price increases, setting off an inflationary sequence.

The monetary policy response to the oil price rise now should take heed of the lessons offered by the experience of the 1970s. Interest rates should not be cut to accommodate what is happening in the oil markets. But neither should fears of inflation due to oil price rises necessarily mean that interest rates should be raised. The oil price hike is a one-off event; it does not mean that inflation has re-emerged, and the appropriate response is not a knee-jerk anti-inflationary adjustment of the interest rate.

Whether the Monetary Policy Committee should have raised the interest rate last month is moot. It should not have done so for fear of inflation in the housing market, and it should not have done so for fear of the effects of rising oil prices.

Interest rates have risen recently in the UK, with the Monetary Policy Committee apparently fearing the effects of a house price boom and bust on the overall economy. Inflation, meanwhile, remains well below the 2% target. The interest rate hike is in my view premature. Rather than ensure a soft landing for house prices, it might precipitate a crash. Holding rates constant for a while longer might have been more prudent at this time.

The debate on differential tuition fees for higher education has hit the headlines once again, with over 150 Labour MPs signing an early day motion suggesting that they are likely to vote against the government. This would be unfortunate indeed.

Since the early 1990s, funding per undergraduate student in the UK has declined from £8000 to £5000. Multiply this by the number of students in the system, and it is clear that, in comparison with the recent past, total income from this source is at least £6 billion less than it might have been. This funding gap is adversely affecting the fabric of our higher education institutions; it is adversely affecting the conditions under which our students study; and it is severely challenging the ability of our best universities to compete with the best universities worldwide. Nobody seriously doubts that the universities need more cash. The problem is: from where?

Taxing in order to improve the finance of higher education is not an option. Closing the funding gap would put 3 percentage points onto the basic rate of income tax. That is politically infeasible. In any event, it would be inequitable to impose taxes on those who do not benefit from higher education in order to fund the univerisites; it would be wrong to expect road sweepers to pay for the investment made in people who later in life get high earnings on the back of their education. The debate about this ended with the introduction of flat rate tuition fees.

At stake now is the matter of differential tuition fees. Different students study different courses, have different abilities, and have different needs. It is absurd to pretend that all benefit, and that all should therefore pay, equally for the higher education they receive. Some benefit more than others. So some should pay more than others. That is only fair.

Some people object to differential fees on the grounds that their introduction will create a two-tier system of universities. This is hogwash. Higher education institutions already charge differential fees to all postgraduates. They also already charge differential fees to all undergraduates domiciled outside the EU. Universities already receive incomes from their students that vary according to how much the market will let them charge. Courses with a strong reputation charge more than those without. What is new?

The proposals before parliament could certainly benefit from some refinement and clarification. In particular, the bursaries system that has been mooted should be administered (and in my view largely financed) by the government - only the government has a mandate to redistribute income in this way. And we need to be sure that, unlike the existing fees, the new fees should not be a stealth tax - when the government introduced tuition fees at a level of £1000 in 1999, it reduced its own funding for each undergraduate student by an almost identical amount.

Notwithstanding this, the principle of differential tuition fees is a good one. It is not right that students on courses that will benefit them relatively little should pay as much for those courses as other students on courses that will benefit them a lot. The proposals currently before parliament will remove that horrible inequity. Those MPs who are considering rebellion should consider that.

The recent decline of the US dollar has been dramatic. The stimulus for this has been the huge current account deficits faced by the US. That these deficits should emerge at a time when the American economy has not been growing strongly is a concern - as the US economy expands, more imports are likely to be sucked in, and the current account deficit will increase further. To mitigate this, the weakening dollar should at least make American goods cheaper for consumers in other countries to buy.

The flip side of the weakening dollar is the strengthening of other currencies (such as the pound or the euro) against the US currency. This makes it harder for these countries to sell goods in the US, and so will make it more difficult for the European economies to pull their way out of the recent period of sluggish growth. A strong recovery in the US is, more than ever, what Europe needs in order to stimulate growth on this side of the pond.

My work on A level curricula and subsequent labour market earnings has been generating some media interest in the last couple of days. Essentially this work takes issue with earlier studies that suggest that maths is the only A level subject that positively influences subsequent earnings.

I disagree with this earlier work because, in my view, it does not make sense to examine the labour market impact of each subject separately. Students take a curriculum - a whole set of subjects - at A level, and they do so because they expect the interaction of these subjects to pack more of a punch than can a single subject. So taking chemistry alongside, say, physics can be more effective than taking either subject in isolation - because there are beneficial spillovers from one subject to the other.

The work that I have done uses a sophisticated statistical estimation method based on neural networks to analyse the impact of all possible combinations of subjects. The results suggest strongly that:

(i) maths is not the only subject that contributes to future earnings
(ii) it is not possible to say that a narrow curriculum is more productive than a broad curriculum or vice versa - subsequent earnings depend on the precise mix of subjects studied
(iii) again, it is not possible to claim that a curriculum dominated by sciences is more productive than one dominated by arts - for exactly the same reason; subsequent earnings depend on the precise mix of subjects studied.

The results are therefore quite complicated. But, of course, that is what we should expect. The interactions between different subjects are complex indeed.

The Euro is falling against the dollar. While there has been renewed optimism in America about consumer spending, France in particular has slumped, this putting downward pressure on the Euro. The adjustment in the currency's value should help stimulate the French (and more generally the Eurozone) economy, but what effect will this have on the UK?

The strength of the Euro in the recent past has rendered British exports reasonably competitive and has buffered the UK economy from the worst effects of the downturn. With the Euro now adjusting downwards, Britain's strength is less apparent. A soft landing still appears to be the most likely outcome, but we are not out of the woods yet.

The government's publication of the results of the five economic tests for entry to the Euro has exposed the political nature of the exercise. Four (or is it two?) of the economic tests have failed, but the government's response is to put measures in place to help ensure that the tests can be passed in future. It is striking that these measures were not put in place several years ago. The reason they were not is, of course, that the five tests have served merely as a screen to cover the politicians' prevarication.

What we have needed all along - as I have mentioned before - is a cost-benefit analysis. The five tests did not produce that; they were narrowly focused tests, some of which were bound to fail (if it suited the government for them to do so) because they asked questions along the lines of how long is a piece of string. We don't need five tests to tell us that the Euro will reduce our own government's flexibility to manage the economy - we know that it will do that. What we need to know is whether the costs of that are more than offset by the benefits of a more certain economic environment. For all the huff and puff of the Chancellor's announcement, we are no nearer knowing the answer to the question that really needs to be addressed.