BRITAIN’S TRADE POSITION

Press, Volume LXXXIII, Issue 25092, 25 January 1947, Page 8

BRITAIN’S TRADE POSITION

GAIN IN EXPORTS NOT MAINTAINED EXCHANGE DIFFICULTIES (Special Correspondent N.Z.P.A.) (Rec. 7 p.m.) LONDON. January 22. Britain’s industrial troubles—the chief of which are lack of coal and manpower and restlessness over hours and wages—together with the publication of the statement on the economic situation and the announcement of the trade figures for the last year, are providing plenty of material for thought.

The trade figures endorse the difficulties facing the country in the months to come. They have tempered the enthusiasm manifested a short time ago at the rising trend of exports, for they show that the excellent progress made during the first half of the year has not been maintained. It is not expected that further recovery will occur for a few months longer. While at one time it was noped that the volume of expoj-ts for the year would show an increase on the pre-war volume. it is now found that it is no higher than in 1938. The present indication is that exports will “flatten out” at 20 per cent, above 1938. and that the target of a 75 per cent, increase is out of the question for some time.

The failure to maintain British exSorts in the second half of the year as several causes. They include th? fact that shipments abroad of iron and steel, after rising considerably, fell back to the 1938 level. Seasonal holidays had their effect too. The shortage of coal was also a factor. In addition to influencing production, coal, which before the war represented 7.9 per cent, of the total value of exnorts. provided no more than 1 per cent, last year. A serious aspect was that the failure to maintain a steady increase in exports occurred during a period when the numbers employed in export trade rose to nearly half a million more than before the war Imports Restricted With imports being deliberately restricted. Britain was able to keep them to 70 per cent, of the 1938 figure. This, with improved exports, enabled her to halve the deficit of 1945. The deficit last, year was just on £336.000.000. It is not expected, however, that Britain will be able to keep imports at 70 per, cent, of the pre-war volume, since at that volume they will be below what will be required in due course to maintain export capacity. The country’s trade problems are not entirely concerned with production. They are also affected by the exchange Sroblems of foreign countries, which ave lately become a serious hindrance to exports. Largely because some Continental countries have not the sterling

funds, Britain has been unable to import from them anything like the quantities of goods she did before the war. This not only means that they are unable to take British exports, but also that Britain has had to buy supplies in dollar or "hard” currency countries, which include the United States, Canada, Newfoundland, the Argentine, Sweden, and Switzerland. is resulting in the American and Canadian loans being used at a greater rate than was previously expected. Though Britain by no means faces a dollar crisis yet, the fact remains that to stabilise her trade she needs to export more goods to the dollar countries and less to the "soft” currency and sterling countries, while importing mote from the latter. Inability to purchase on the pre-war scale from the Continent and from former suppliers in the sterling area largely explains why Britain’s buying from the. dollar countries has risen from the pre-war level of 30 per cent, to over 60 per cent. If Britain could buy from her former suppliers she would save £ 120,000,000 annually in dollars or hard currency. This currency position is one of the new difficulties which have been encountered in the last few months, and it is one that is expected to influence the export position for some time to come. Production First Meanwhile, as is emphasised by the economic statement, Britain’s chief need is for production and more production. While incentives in the way of shorter hours, higher wages in some industries, and income tax reliefs are being considered, one of the chief problems is lack of manpower. Two suggestions are being made to increase the labour force. One is to tap the reservoir of foreign labour available and to set it to work in the mines, in industry, particularly foundries and textile mills, and agriculture. The other is that the armed forces should be reduced. The Government statement showed that one and a half million were still in the forces in November, while nearly half a million were engaged in manufacturing supplies and equipment for them. This is about one-tenth of the working population, and together with those employed in national and local government, and the police and fire services, they total nearly onequarter of the working population. The general effect of the publication of the facts and figures of Britain’s economic position and trade position, is ro direct increasing attention to the forthcoming ‘‘economic debate” in Parliament.