BRITISH CRISIS MAY SERIOUSLY AFFECT N.Z.

Chronicle (Levin), 1 July 1949, Page 5

BRITISH CRISIS MAY SERIOUSLY AFFECT N.Z.

WELLINGTON, June 30. New Zealand is likely to be seriously affected by the crisis which is now developing in Britain, it was learned here today in the course of inquiries among those with expert knowledge. The announcement of the conference of Finance Ministers is the prelude to something more than another 'jaimt" for Mr. Nash — it is symptomatic of a critical situation in the world in general and in sterling countries in parti cular. 1 ; The essence of the problem can be stated simply: Britain is unahle to balance exports and imports and, despite the achievements. of her export drive, her dollar halance is falling and even Marshall aid may De nnavailing. Today she is faced with two alternatives; she imust either increase the quantity or prices of her exports, or reduce the quantity aiid/or'the prices' of her imports. In hoth cases she must accept the fact that a radical reduction in living standards is inevitahle. Trade intelligence reports from London indicate that the initial impetus of the production drive has now been lost and years will have to elapse before capital programmes bear . fruit and a stable increase in production is aeliieved. If the volume of her exports cannot be increased then she could put up her export prices. But can she? the ecxmomic observers ask. Ameriean recession has intensilied internationa1 competition and higher prices would merely accentuate the* demands of tTm Dominions to convert credits into dollars and buy more from cheaper markets. The first alternative appears to bc out of the question for the moment. There remaihs the sccond alternative namely, a reduction in the cmantitv or

nrices of her imports. Tn the case of Danislf butter, a reduction has beer> secured in ,the imnort price. Tt is quito obvipus that the, .Dnnes did not eccept a 50s a cwt. reduction out of the kindness of their hear-ts. Tt appear? probable that thev faced having to restrict their export volume or cut the price. If this is indeed whjat happened, New Zealand 's negotiatqrs now in London may have had one of their strongest bargaining weapons snatched from their hands when negotiating next season's butter prices. Up till now New Zealand has received nearly 100s a cwt. less than Denmark for its butter. This margin has ,now been whittled down to about 35s