Budgetary Prospects

Press, Volume LXIX, Issue 20997, 27 October 1933, Page 10

Budgetary Prospects

The president of the Associated Chambers of Commerce has done well to call attention to the budgetary situation, for despite bland references by members of the Cabinet to " manageable deficits " that situation is not at all satisfactory. The unpleasant truth has to be faced that a period of deficit financing began in the financial year 1927-28 and that even the economies of the last

two years have not checked the progressive widening of the gap between revenue and expenditure. In both 1931-32 and 1932-33, if capital payments are excluded from the credit side, the national accounts were more than £5,000,000 out of balance. The provisional estimates I for 1933-34 cannot be regarded as reliable; but it seems probable that, j excluding the cost to the budget of the higher exchange, there will be a revenue shortage of about £5,500,000. The situation seems to be, therefore, that the country has now a recurring deficit of about £5,000,000; and the problem of restoring budgetary equilibrium is probably the most serious the country has to face. As the president of the Associated Chambers of Commerce points out, the adjustment of future deficits will be particularly difficult. The hypothecation in the last two years of £4,500,000 of soldiers' settlement loans has exhausted practically the whole of the Government's liquid reserves, while taxation is already so high that it constitutes one of the main obstacles to economic recovery. Clearly further economies in State expenditure are urgently necessary. It must be hoped, therefore, that the Associated Chambers of Commerce will take this opportunity of reviewing the agitation for local government reform and for a rationalisation of the present unnecessarily expensive hospital system.