With one eye on the election Mr Clarke blocked a rate rise, though the pound continued to soar.MARCH:NatWest’s investment banking business was plunged into crisis as the bank revealed a pounds 77m “hole” on interest rate options contracts. On 2 January, the FTSE 100 index opened at 4079.9, an 11.6 per cent rise from the previous year, while the pound was worth 2.63 German marks.FEBRUARY:Ms Scardino’s honeymoon ended abruptly as Pearson broke the news of “accounting errors” at its US Penguin Books business, costing it pounds 100m. The irregularities were found to be the work of just one employee.Shares soared in a stock market tiddler, Lanica Trust, as rumours circulated that its leading light, a 31-year-old entrepreneur called Andrew Regan, was planning an audacious bid for the Co-Op. Yorkshire Electricity became the last regional power company to be bought in the wave of US acquisitions The buyers, AEP of Ohio and PS Colorado, paid pounds 1.5bn. February also saw a landmark demerger, as British Gas split itself into two companies.The disagreement over interest rate policy intensified between Eddie George, Governor of the Bank of England and the Chancellor, Kenneth Clarke. She flew to Frankfurt to remonstrate unsuccessfully with the Bank’s German owners with a press pack in tow.British Airways’ attempts to forge an alliance with American Airlines were grounded, as the European Commission and US rivals piled on the pressure.For thousands of building society investors, 1998 promised to be a year of windfall payouts.

Halifax revealed it would give 8 million members 200 free shares when it floated on the stock market in June.Pearson named Marjorie Scardino as new chief executive of the media empire and Financial Times publisher – the first woman appointed to the helm of a FTSE 100 company. On that pessimistic note, and for those readers who have got this far, a prosperous and happy new year to all.. This year was a roller-coaster for investors, businesses and their leaders. The stock market surged to a new high and then fell back as the Asian crisis started to bite. A spate of takeovers and demergers saw some of the UK’s best known corporate names disappear while some of the leading personalities in the City bowed out of the limelight.

Chris Godsmark, Nigel Cope, John Willcock and Andrew Yates review an eventful year. JANUARY:
The new year got off to a flying start as pounds 1m-a-year “superwoman” Nicola Horlick was publicly despatched from her job as head of Deutsche Morgan Grenfell’s pounds 18bn pensions fund business. The world may be integrating as never before, but it is also dividing as never before – into the haves and the have nots. Despite the traumas of the Far East and the deflationary brake they will be applying to the world economy, we also live in a period that justifies great optimism.