The Grey River Argus THURSDAY, April 8, 1948. STABILISATION IN BRITAIN

Grey River Argus, 8 April 1948, Page 4

The Grey River Argus THURSDAY, April 8, 1948. STABILISATION IN BRITAIN

{ J’HE essence of the momentous Budget with which Sir Stafford Cripps may prove to be making history in Britain is simply stabilisation. There have been some sales tax decreases and some sales tax increases, hut the object is that of equating to a greater extent the amount of purchaseable commodities and services with tire amounts of purchasing power in the hands of the people. The Chancellor may indeed be making a rather poorer mouth than he need in declaring that the record surplus for the past financial year has quite failed to realise the hopes entertained at the outset. This plea is justifiable mainly on Mie ground that the prices of commodities in terms of sterling, and especially American commodities, has been far greater than may have been foreseen. In turn, this, however, has been a result of a depreciation in sterling, the full extent of which is not yet evident. In various industries production in Britain has been increasing (considerably, but the trouble is that this increase has been largely in commodities destined for export, whereas goods essential for the population have had to be imported on a large, if reduced scale, but have not been obtainable as cheaply as before. Sir S. Cripps says export returns have only been £75,000,000 below the estimate, but invisible exports, consequent on the liquidation of overseas investments, have returned £90,000,000 below the estimate. While- the Exchequer had to dispose of gold in large quantity and deplete dollar reserves, despite the American loan, it must be anticipated that much of the benefit from the loan is yet to be realised. Films, tobacco, drink, and such consumables, may have accounted for much loss of reserves. but a deal of machinery and other essentials for industrial revival have been obtained, the proceeds of which have not yet contributed to the .national credit in the degree they are destined to do in the final analysis. A notable item is the new impost on income from investments, which may be regarded as a substitute for a capital levy. It is said that the Budget does not provide for sufficient taxation of profits, but the Chancellor* claims his present line is to obtain a limitation of profits by voluntary agreement. He also quotes the attitude of Organised Labour in .favour of the stabilisation of wages levels, and declares that two-thirds of all profits are now going to the State. It is expected that voluntary action will avail to hold down nearly all prices, whilst the Chancellor declares that people should limit their spending to the utmost. It. is in some of the directions wherein votaries arc disinclined everywhere to limit spending, such as gambling, drinking and smoking that the Government aims to collect a lot of money which is laid out. Social services are not to be pinched in the slightest, whilst the incomes of executives and experts are being taxed less as an inducement for them to work harder. At l.ho bottom of the scale small incomes obtain tax concessions, including those of old people who live off smaller investments. With greatly swollen circulation of currency, such people, as well as the more lowly paid workers, are apt to be swamped in a sea of rising prices. Naturally the whole of the readjustments are to be taken collectively. The idea is to work towards two ends by a AA'ide variety o|‘ means. Those ends are increased production and reduced spending. This does not, of course, mean that the Chancellor expects to exert a directly coercive effect. He has simply framed a fiscal net which is calculated to catch so much of the money that may be spent in certain channels —otherwise not controllable —that it will largely dry up the resources for it. Inflation is the main problem, Britain being a country very largely dependent on imports, and having to-day

relatively less real wealth than ever to equate her enlarged currency and her enlarged indebtedness.