TASKS AHEAD OF BRITAIN

Press, Volume LXXXVIII, Issue 26857, 9 October 1952, Page 9

TASKS AHEAD OF BRITAIN

Maintaining Strength Of Sterling

(NJ!. Press Association—Copyright)

(Rec. 8 p.m.)

LONDON, October 8.

Britain still had two imperative tasks before her—checking inflation at home, thereby reducing costs, and ensuring that confidence in her ability to pay her way was not sapped by the continuing distaste for living within her means, the Chancellor of the Exchequer (Mr R. A. Butler) told bankers and merchants of the City at the annual banquet given by the Lord Mayor (Sir Leslie Boyce).

In addition, Britain had to establish her balance of payments and external financial system on a sound and enduring basis.

Although grateful for help, Britain looked forward to ths day when she could stand once more on her own feet.

“The price of such independence is dear,” he said. “It means real sacrifice and effort.”

Mr Butler said that Britain could not run a semi-war effort and at the same time secure every home comtort. He did not believe that success in living within her means could be assured by the panic slashing of the various services. To avoid further taxation increases the nation must continue taking care.

Of the fight to maintain the strength and stability of sterling, Mr Butler said: “We shape our policies and make sacrifices to that end. Our own prosperity and that of the world depend upon it. Without it the volume of world trade would shrink sharply and a score of countries would stagger under a blow to their economic and social life, from which some might not recover.

“We must live by competing with Germany and Japan and other striving nations. I say we must live by trade, not aid.” Mr Butler continued.

'The object of the strict home financial policy was not to create austerity for austerity’s sake, but to remove a dragging burden and fit Britain for her main task—to compete, gain and win in the world markets. The Government was determined to help create unhampered trade conditions throughout the free world, in which alone Britain could prosper. “We cannot shrink inwards upon ourselves. We must be bold enough to turn outwards and must accept risks to gain prizes. We intend, by our example, to give a fresh lead” to the resourceful and ever-helpful members of the Commonwealth family. With their help we hope to build the future prosperity of the free world based on the firm foundation* of an international system of trade and finance which will be at once more real and lasting than that devised after the last world war.”

“Less Inflationary” Mr Butler said that Britain’s financial situation was a good deal less inflationary than a year ago. Already London and the sterling area were recapturing their good name and proved position. Mr Butler said that the efforts Britain and the sterling area nad made* coupled with defence aid from the United States “have enabled us to staunch the wounds from which we were losing so much of our lifeblood. They have enabled us to keep our gold and dollar reserves about the same level since the Budget of last March.” When the Government came into office it was faced with a most dangerous crisis in overseas finances.' In the last half of 1951 Britain ran a deficit with the whole of the rest of the world at the rate of £800.000,000 a year. In the first half of 1952 she had earned a small surplus on the current account, excluding United States defence aid.

Mr Butler added: “I can say definitely that this has been achieved without any depletion of our stocks taken as a whole. Indeed, there has been some increase.”

Mr Butler saicj that in September Britain had earned her first surplus with the European Payments Union since April, 1951. The British people had been spending less than last year on many types of goods for their personal use. Wages and prices had increased by only about half as much as the previous year. Most of the additional revenue for which he had budgeted would not be received until late in the financial year. The full effect of the reduction in food subsidies was still to come. At the same time defence spending was running at a much more stable level. Mr Butler said: “I am determined that the improvement in our external finances will not be prejudiced by any slipping away on the home front”