The transcripts of the official inquiry into the culture, practices and ethics of the press. More…

Not entirely. I'm sure he read his newspapers. I'm sure he read his newspapers and I would be very surprised if he wasn't aware in more than outline of the line taken by his newspapers.

From all I understand, he gave a good deal of degree more latitude to the Times, quite properly in my view, and the Sunday Times, than he did to the Sun, which was a sort of house pet, so I would be very surprised if he wasn't much more aware of what the Sun were actually printing than Gus O'Donnell suggested in his note.

But we did have some important things to discuss. If I can pick up some of those points you raised. On the day I became Prime Minister in 1990, interest rates were 14 per cent. They went up. When we entered the exchange rate mechanism, it was in order to bring interest rates down. Myth, repeated over years, has it that interest rates went up during the period we were in the exchange rate mechanism. In fact, they came down from 14 per cent on the day I became Prime Minister to 6 per cent when I left, and came rattling down during the period we were in the exchange rate mechanism, except for Black Wednesday when they went up and came down again the next day. So they came down consistently.

The message I wished to give to Mr Murdoch was actually the British economy actually started recovering -- and you can see this very plainly now in retrospect -- actually started recovering in the first quarter of 1992, when we were still in the exchange rate mechanism, and continued thereafter, and was so secure -- I don't think we make the point often enough. In 1997, we actually handed over an extremely good economy. I cannot think of when a better economy was handed over, and from the beginning of 1992 to about 2001, you had growth every single quarter, which is pretty unprecedented, and the message I was hoping to give to Mr Murdoch and may indeed have done, if the meeting took place, was that we were on track towards a recovery and it would accelerate.

We were looking at how to leave the exchange rate mechanism. We never saw the exchange rate mechanism as a first step towards a single currency, and that must have been evident to everybody because I obtained an opt-out at Maastricht in 1991 to ensure that we did not enter the single currency. I was not in favour of the single currency. I was in favour of getting inflation down and I was in favour of it because I remember as a child what it is like when the money runs out before the week runs out, and that is what inflation did. So I was prepared to take a great deal of political pain to keep interest rates in place to get inflation down, and I knew it was painful politically. More important, it was painful for people at the other end of those high interest rates, but when we had done it, we had over a decade of low interest rates and solid growth, and that's what it was about, because we had seen for generations governments run away from inflation. Inflation had come, interest rates had gone up, been a bit painful, they'd brought them down, and you'd had this constant curve of inflation going up, coming down, going up, and we wanted to kill it off.

That's what the exchange rate mechanism was about and that's what I was hoping to explain to Mr Murdoch, that we had started that recovery but there was still a long way to go. Whether I did, as I say, I can't remember.

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