Evening star., 1949-10-27
Britain Trims Her Sails

The Immediate reaction to the economies
announced by Prime Minister Attlee Is
that he has not cut deeply enough into
British spending. -
1t is hard to say whether this is valid
criticism. The total reduction is about
$784,000,000, or about per cent of the
projected budget. This certainly is not
an inconsequential cut for nation whose
people, or many of whose people, have
been enduring standards of living far
below those which prevail in this country.
OF course, if this reduction in spending
is, not enough to restrain the inflationary
trends anticipated as result of the
devaluation of the pound, the consequences
will be very serious for Britain. The pound
was devalued primarily to facilitate British
exports to the dollar areas. The theory
was that, with devaluation, the selling
price of British goods could be brought
down to point where British producers
could sell their products for dollars in a
competitive market. Unless she earns
these dollars, Britain cannot purchase the
food and other items obtainable only in
the dollar areas, and which are essential
to the maintenance of BritainS economy.
Hence, the Importance of curbing further
imitation, for imitation inevitably means
high prices. and if the prices of British
goods go up the selling opportunity pre-
sented by devaluation will be wasted.
1t is much easier, however, to marshal
the arguments for economies sufficiently
drastic to curb imitation in Britain than
to say just where that line ought to be
drawn. There are other factors which
the Prime Minister has to consider. One,
OF course, is the political effect on the
Labor Party. Perhaps political considera-
tions have no place in this, decision, but
it is naive to suppose that they will not
be considered. Another factor concerns
the reaction of British workers. In addi-
ton to making governmental economies
wages must be kept from advancing, for
wage increase also would lead to infla-
ton. But if the economies should bear
down too severely on living standards it
would be extremely difficult for the Attlee
government to resist demands for higher
wages, and this is something that the
Prime Minister, as the responsible official,
has to weigh carefully against what other
wise might be desirable in the way of
greater austerity.
The reasonable conclusion from all of
this is that the Labor government has
taken substantial step in the right
direction. 1t may prove to be adequate
II not, there will be opportunity for still
more economies.
What Is most surprising, and what has
received relatively little comment, is
Mr.. Attlees failure to suggest anything
in the nature of new incentives for greater
production and increased exports to dollar
markets
The government evidently still relies In
this respect on appeals to patriotism, and
1t is true that these have been effective
in isolated and relatively unimportant
segments of industry. But until something
new is tried there is little reason to hope
for significant improvement in either
respect. For the worker, taxes cut deeply
into increased earnings and there is little
to buy with what he has left after taxes.
The manufacturer is able to sell all that
he produces in the sterling area, and the
oppressive taxes that he must pay dis
courage the effort that would be necessary
to seek out new markets in the dollar area.
These are conditions which will not be
materially improved by economies, and
as long as they prevail they will tend to
rob Britain of the opportunity for economic
recovery which came with devaluation of
the pound 1t is not at all encouraging to
see the British government persisting in
its failure to cope with these aspects of
= its problem
Frunco-SuIozor Conference