ECONOMIC SURVEY

Press, Volume XCI, Issue 27576, 5 February 1955, Page 7

ECONOMIC SURVEY

Sterling Area Progress

(Special Correspondent /I J! J 9. A.) (Rec. 8 p.m.) L’ONDON, February 4. It seems agreed that the Chancellor of the Exchequer (Mr R. A. Butler), in his economic turvey to the Commonwealth Ministers today, presented- an fepcourtging picture of progress made, by the sterling area so The diplomatic correspondent of the “Daily Hferald” sums it up by saying: “The economic health of the Commonwealth is flourishing—but there is just a risk of high temperature.” The correspondent says: ‘‘That sums up the views of the meeting, which seems to have been an occasion for mutual congratulations. Everybody agreed that the last two years have been economically satisfactory, but the optimism was slightly diluted by Mr Butler’s warning that success can be dangerous.” My Butler urged everyone to watch the risk of inflation and to act swiftly as he had acted last week when he raised the Bank Rate. All the Prime Ministers are apparently confident they are capable of dealing with this risk. The “Financial Times,” commenting on Mr Butler’s note of warning on inflation, says that it was specifically stated that Australia and New Zealand at the moment had their financial situations well in hand. The immediate word of caution concerned danger of a rise of import expenditure in the next few months before the sterling area dollar earnings had begun to show any substantial increase as a result of the revival of United States business. Commonwealth countries in the meantime must watch their import bills, the newspaper says. Improvements in U.S. Policy Reuter’s reports that Mr Butler told the conference that the improvements in the American economic policies were helping towards the time when Britain could make the £ freely convertible. But he made it perfectly clear that he could not yet foresee any date for convertibility, and he hoped lor still more liberal American policies. Mr Butler reported an improvement in the gold and dollar reserves of the sterling area—to which all the Commonwealth countries except Canada belong. Last month the reserves increased by 1,000,000 dollars, and'now stand at 2,763,000,000 dollars. Mr Butler also gave an impressive survey of British production. and export figures, and drives to obtain North American constructional contracts and sell in the dollar market. He expressed in general terms Britain’s belief in G.A.T.T. as necessary to the world trading system, but recognised that certain safeguards were necessary to protect certain Commonwealth interests. He is also reported to have made these other points: Now that the sterling area is pushing up its own production mare imports are being allowed to flow in. Exports recently reached record levels in volume and value. The sterling area’s task is to expand its world trade. The United States Government is giving priority to the extension of trade agreements as well as modifying its- ‘4Buv American” policy. ' More than half of Britain’s trade is now with her Commonwealth partners. Britain, because of her expanding'-pro-duction, is now importing more commodities, including coal. A date for convertibility certainly could not be envisaged, but there have been distinct advances assisted by improvements in. the American policy.