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Thursday, November 5, 1998 Published at 18:10 GMT


Talking Point


Is unemployment a price worth paying?

The Governor of the Bank of England, Eddie George has provoked outrage with his comment that job losses in the north were an acceptable price to pay for curbing inflation in the south.

Mr George was quick to add that while rising unemployment in the north-east is undesirable, "monetary policy can only target the economy as a whole, not particular regions or sectors, however uncomfortable that reality might be."

Job cuts have been rife in the north of the UK with manufacturers Fujitsu, Siemens, Vickers, SR Gent, Grove Cranes together slashing 3,500 jobs.

But many economists believe that we need a certain level of unemployment to control inflation.

Is it fair that those in the North should suffer for the prosperity of the South? Is it time the Bank of England made a significant cut in interest rates?

Some Labour MPs are calling on Mr George to resign as a result of his comments.

"If he continues to affirm the view that the people of the north of England are ready to be sacrificed to guard his interests, then I believe he should join them and resign," said Labour MP Denis MacShane during a Commons debate.

General Secretary of the Manufacturing, Science and Finance Union, Roger Unions accused the Monetary Policy Committee of being out of touch.

"Eddie George has shown a complete disregard for the effects his policies are having on ordinary people and their families who are thrown on the unemployment scrapheap by his intransigence," he said.

However economists argue that the governor is quite right. They maintain that a rise in unemployment means less pressure for wage increases that can cause inflation to rise.

What do you think?

Is unemployment a price worth paying?


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