IF LABOUR'S inexperience of power implied a period of quiet settling in, how swiftly we were disabused by new Chancellor Gordon Brown delivering the biggest shake-up of economic policy in decades.

For in hiking interest rates a touch - to prevent overheating of the boom economy he has inherited - and then handing future control of them to the Bank of England, he has shown that New Labour is determined to be radical and decisive at the outset.

Of course, with its huge majority, it can afford to be.

But, if this dramatic move earns Labour early credit as a positive new force, the deed might also be seen as an encouraging act of probity.

For, at a stroke, it takes the politicians' hands off the manipulation of borrowing costs.

In future they will rise or fall on the Bank's independent judgment of what is best for the economy in the long term, rather than being influenced by risky short-term party political concerns and attempts to woo the voters.

Yesterday's 0.25 per cent rise, for instance, is probably one that was overdue, but was held off by the former Chancellor for purely electoral reasons.

But now we have this change, the departure from the politically-influenced stop-go of the past should lead to more stable economic conditions in the long run that, in turn, augur for lower interest rates generally.

And, certainly, the City took that view - as the stock market and the pound soared to new heights in response.

However, this probity is perhaps laced with a little political pragmatism after all.

For in handing control of interest rates to the Bank in a boom, Mr. Brown has also passed it something of a buck to which he can point when economic downturn looms.

And when pressure for higher spending is put on the Chancellor from the back benches, he can always turn around and say that the Bank would only crack down with higher interest rates if he loosens the purse strings too much.

Additionally, is this a first step towards fulfilling the Maastricht Treaty criteria for European monetary union?

Mr Brown divorces the move from that, rightly pointing out that the government, not the Bank as the convergence criteria would require, still sets inflation targets.

Even so, for all its basic integrity, this move may still alarm the Eurosceptics who see it as a stride towards the day when government control of interest rates, inflation and all else is passed not from No.11 Downing Street to Threadneedle Street, but to a Central European Bank in Frankfurt.

Converted for the new archive on 14 July 2000. Some images and formatting may have been lost in the conversion.