COVERAGE of the North-South divide has concentrated on the problems facing manufacturing in the West Midlands as a result of the weak euro.

But this fails to look at the contribution made by the Chancellor, Gordon Brown, to these difficulties.

The public spending increases announced in the March Budget (and again in the July statement) must have an inflationary effect which can only be countered by a tough interest-rate policy.

That means rates will stay higher than necessary for longer than necessary.

This in turn makes the pound more attractive to foreign investors - our interest rates being much higher than those in the euro-zone - and therefore exacerbates the price differential between sterling and the euro.

All of this means it is harder for British manufacturers to export and easier for their foreign competitors to sell their goods in Britain.

Mr Brown's spending spree has ensured that this situation will persist until such time as the euro zone manages to bring some credibility to the single currency. To reduce the North-South divide, the Government should be giving us lower taxes, less regulation and more control over public spending.

This would reduce interest rates, cut the value of the pound and relieve Midland businesses of a massive burden of red tape.

JENNY NELDER,

Chairman,

Institute of Directors,

Midland Branch.