BAD news on the economy forced Tony Blair on to the defensive in the House of Commons.

Manufacturing jobs are being hit by the strong pound and high interest rates, and economists are coming up with some fairly grim forecasts for the end of the year.

It is a situation no government enjoys.

And the complications on the Japanese and other Far East markets are making accurate forecasting even more difficult.

The slump in the Far East is serious for the West.

Order books in Britain are falling faster now than at any time since November 1995, with companies blaming the crisis in Asia and the strength of sterling.

They claim they are losing out to cheap foreign goods on domestic and international markets.

Their claims that little action seems to be forthcoming from Mr Blair's Government are understandable. One Tory MP accused the Government of sitting complacently while the higher pound, higher interest rates and higher business taxes were hitting businesses.

The Government is determined to avoid the "boom and bust" scenario that has dogged previous Labour administrations.

That is to be applauded.

But the Government has got to be seen to be taking action over the state of the economy long before it becomes a case for intensive care.

The rest of the world looked on in shocked disbelief when the Japanese economy showed cracks which quickly became chasms. But, until very recently, the Japanese Government sat on their thumbs and did nothing.

Tony Blair and his colleagues must not make the same mistake.

Economies are cyclical and we are in part of the cycle. But, if we free-wheel, the prediction by one economist that Japan's nightmare could become Europe's bad dream will come to pass.

Steps have got to be taken, and taken now, to prevent the fall-out from the Far East situation from hurting.

Tony Blair must realise that while a steady hand on the helm is required in order to avoid the sort of complacency that has proved so costly for the Japanese he must also side-step panic measures which could lead to "boom and bust."

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