It also received seven Oscar nominations earlier this week, including four for Dead Man Walking, the Sean Penn and Susan Sarandon film that opens in the UK shortly.Although pop slipped in the second period, it still contributed 65.8 per cent of the total sales for 1995, with 31 albums selling more than 1 million copies, compared with 29 in 1994. Although there was no hit like the previous year's Four Weddings, it had enjoyed success with Nell, French Kiss, The Usual Suspects and Shallow Grave. But he said the price would have to be right - a reference to PolyGram's failure to acquire the Samuel Goldwyn library after being outbid late last year by John Kluge's Metromedia International Group.The films division, which now accounts for 14 per cent of sales, was developing well, with costs under control. The company argues that local currency growth is the true measure of its performance since less than 5 per cent of its revenues come from the Netherlands.Meanwhile, Alain Levy, president and chief executive of the company that is building a films division alongside its music business, said he would consider the acquisition of any available film studios, including MGM.

The previous four years had seen average profits growth of 20 per cent, a performance repeated in the first half of 1995, when net income rose 20 per cent to 270m guilders on total sales of 4bn guilders.It blamed the difficulties in the usually stronger second six months on a weaker-than-normal performance by the pop division, the late delivery of several important albums, the absence of a success to match the hit film Four Weddings and a Funeral and the strong appreciation of its reporting currency, the Dutch guilder. The presentation is designed to allow the Bank to illustrate its judgements about the balance of inflationary risks.Comment, page 21. ROGER TRAPP PolyGram, the international entertainment company, overcame a slow second half to achieve its eighth consecutive year of sales and profits growth in 1995. The company, which warned of flat earnings for the year shortly before Christmas, saw sales in the year to 31 December rise 9.2 per cent in local currency terms to 8.8bn guilders and profits rise 3.6 per cent to 741m guilders. It said the most probable outcome was inflation just under 2.5 per cent by the beginning of 1998, but higher or lower rates were possible. Inflation is a process and requires the consistent application of monetary policy."For the first time the Bank published a range for inflation with probabilities attached to the different possible rates.

"It is likely that M4 is signalling higher planned spending in the future, although it is too soon to tell whether recent growth rates of broad money will persist," it said.Mr King added a note of caution: "Inflation is not dead. However, at the two-year horizon - the one relevant to the Bank's policy advice - the possibility of faster growth meant there was a danger of higher inflation.The report issued a mild warning about the pace of broad money growth. One possible explanation is that firms believe the slowdown in growth will be temporary. "Sooner or later either output will recover or manufacturers will start to shed jobs," said Adam Cole at brokers James Capel.Michael Meacher, the Labour Party's employment spokesman, drew attention to figures showing that the number of vacancies at JobCentres had fallen for the second month running in January, while the number of redundancies was 210,000 in June-August, 16,000 up on a year earlier.Mr Meacher said: "This month's fall in unemployment cannot disguise the fact that the performance of the British economy is still weak."Mervyn King, the Bank of England's chief economist, said that in the short term there was a risk of further economic slowdown, which would tend to make inflation lower. It forecasts only a modest rise in earnings growth during the next two years.However, many economists pointed out that yesterday's figures contained some puzzles. "The size of the drop in unemployment is hard to square with other signs," said Michael Saunders at Salomon Brothers.Manufacturing output was flat in the final quarter of the year, making it hard to understand the record job creation.

Overtime in manufacturing was at its highest for five years.Yet despite this the growth in underlying average earnings was unchanged at 3.25 per cent in December, suggesting that lower unemployment is putting little or no upward pressure on pay.Many economists put a very optimistic gloss on the figures, saying labour market deregulation had reduced the rate below which further falls in unemployment trigger rising wage inflation - or the "natural" rate of unemployment.In its Inflation Report yesterday the Bank of England concluded that this explained why wage increases have remained so low. The 28,000 increase in manufacturing jobs in the final quarter of last year was the biggest on record. The biggest declines in the unemployment count were in the South-east, followed by the West Midlands and North- west.In another sign of buoyancy, employment in manufacturing industry rose by 5,000 in December. The monthly decline of 29,300, to a level just above 2.2 million, was the biggest since the end of 1994.

The unemployment rate fell to 7.9 per cent, the first time in nearly five yers it has fallen below 8 per cent.The scale of the fall came as a surprise after a marked slowdown in the pace of decline in recent months. DIANE COYLE Economics Correspondent A sharp fall in unemployment last month combined with better inflation prospects means the economy faces a "golden scenario" this year, City economists said yesterday.The number of people claiming unemployment benefit fell for the 29th month running in January. The chief prosecutor, Richard Goldstone, said the tribunal is expected to issue its first indictments against Bosnian Muslims soon.. nThe Hague - The UN war crimes tribunal said yesterday its first trial, of the Bosnian Serb Dusan Tadic, would begin on 7 May, Reuter reports. Nato was also considering setting up additional road blocks to make arrests more likely, Nato sources in Brussels said.As the Dayton deal starts to crumble, Washington has asked Italy to host a summit of the presidents of Bosnia, Croatia and Serbia in the next few days, Italy's Foreign Minister, Susanna Agnelli said yesterday.