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British growth robust, report says

BRITAIN does not need to either cut or raise interest rates at present because the country is set to enjoy a year of robust growth with low inflation, according to a study published today.

The Ernst & Young ITEM Club said in its latest study that British gross domestic product (GDP) would grow by 2.75 percent in 1994, better than the Conservative government's 2.5 percent forecast. The ITEM Club survey attracts interest because it uses the British Treasury's own economic model for its forecasts - ITEM standing for Independent Treasury Economic Modelling.

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Its upbeat view on the economy means that it sees relative stability on the monetary front in the months ahead. ``The government may make a token interest rate cut to 5 percent in the face of the response to its tax increases, but ITEM's analysis shows there is no pressing need to cut or raise interest rates,'' it said.

Base rates are currently at 5.25 percent. Financial markets are discounting a rise, but many economists reckon the government could trim a quarter point off rates to shore up consumer confidence after personal tax rises this month. Bombay bourse to be computerized

ASIA's oldest bourse, the Bombay Stock Exchange (BSE), will computerize trading in the majority of its shares from Oct. 1 in an effort to bring transparency to the market, its president, Bhagirath Merchant, said.

BSE, set up in 1887, is India's biggest stock exchange, accounting for more than two-thirds of the $70 billion capitalization on the country's 22 bourses.

Transparency in India's stock markets, where trading is done physically by jobbers on the trading floor, has been a major demand of most investors, particularly foreigners who have been permitted to invest in the country's bourses for the last year.

The country's chief stock markets regulator, the Securities and Exchange Board of India (SEBI), has been locked in a battle with brokers for more than two years to introduce reforms in the trading system.

Mr. Merchant said the existing system had led to irregularities on the exchanges. These included trading in fake share certificates, a high level of mismatch of transactions, and delay of up to six months in getting back shares sent for transfer.

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``With computerization ... all the fraudulent practices that exist in the physical system will get eliminated,'' Merchant said.

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