DIFFICULTIES OF BRITAIN

Press, Volume LXXXVII, Issue 26511, 28 August 1951, Page 7

DIFFICULTIES OF BRITAIN

U.N. Report On Economy

. O 4 GENEVA, August tt. The United Nations Economic Commission to Europe announced to-day that Britains economic structure appeared to be suffering from severe ,tr c commission in its bulletin for the first quarter of 1961 said: “Cost iriflation is rampant in Britain and towards the end of the year it may well be enhanced by demand inflation flowing from the heaviest rearmament Programme in Europe.' 1 The bulletin said that the combination of Britain's wavering export trade and the high coat of imports had created a new balance of payments problem which must be countered by a renewed export drive or A cut in Imports. This would also add to the inflationary pressure. The report said that Britain had turned into gold almost the entire gold and dollar surplus for the quarter—£ 163.570,000 -which had brought reserves to a new recotd level of £ 1,342,000.(MX). Devaluation and the commodity boom had both prevented the shiooth functiofiing of Britain’s long-terrfl food purchasing agfeelhents. Contract prices were fictitious when fixed ifi tferfns df a currency of which tne purehasihg power was likely to fluctuate greatly. The report Suggested clauses allowing currency adjustments to be incorporated in Britain's long-term purchases. The commission reported that cost inflation in westerh Europe had continued. "Whether full-scale inflation resurges at the end of the year depefids very largely on the ptogrert of the present efforts to reduce international political tehSlon ” It said that the overseas payments position of the Western Euronean countries had deteriorated sharply and the main burden of financ hg the increased deficit fell on the United Kingdom, which, as the sterling gfeis banker, obtained short-term credit ih the form of increased liabilities.