Effect Of Import Restrictions

Press, Volume XCII, Issue 27795, 21 October 1955, Page 13

Effect Of Import Restrictions

(Rec. 11 p.m.) CANBERRA, Oct. 20. Australian import restrictions, if prolonged, might encourage the establishment of industries which would strain the nation’s resources, the Tariff Board warned today in its annual report. Insufficient industries growing under the shelter of restrictions might capture manpower and material to the detriment of other industries, the board said. These sheltered industries would have little prospect of Success.

The Government nearly a year ago feared the inflationary tendency and took early steps to deal with one of the principal causes—domestic overspending by a nation enjoying a production boom and full employment. Officials claim that the steps—including a rise in the bank rate and a reduction in borrowing—have had considerable effect, and that their full impact has still to be felt.

But the Chancellor of the Exchequer (Mr R. A. Butler) has decided that they must be reinforced by further measures, ensuring beyond all doubt that the strength of sterling and of Britain’s position as a trading nation will be maintained and improved. Reuter’s financial correspondent said next week’s measures seemed bound to go beyond increases in the purchase tax. cuts in housing and farm subsidies and technical adjustments of the tax laws. The Budget might include all those things, but as all of them could be done without a Budget, there would presumably be something more.

There were several reasons for supposing the new tax burdens, if any, would not be sweeping. There was no emergency or crisis—the overstrain on the economy had been described as marginal and minor. The correspondent said Australia’s and New Zealand’s recent import cuts put some disinflationary pressure on British industry. The Chancellor’s main desire was to stop wage inflation, and any new taxes might aggravate inflationary wage demands. he said. Action Necessary

Newspaper comment this morning mostly agreed that action was necessary to adjust the structure of Britain’s economy. “The Times” insisted that cuts in public expenditure were a vital necessity. The “Daily Mail” said one of the surprises in the new Budget might be a scheme for compulsory savings. The “Daily Express” said Mr Butler had two objectives: First, to restore confidence in sterling; and second, to

“cut the fat” from Britain’s economy, in particular to curb drastically any possible Stock Exchange boom.

Other comments were: The ‘‘News Chronicle”: “Whether the Chancellor dislikes the word or not, an emergency Budget means a crisis or the threat of a crisis. We fully believe that if the facts are faced, this crisis can be overcome.” The “Daily Telegraph”: “The decision to introduce an autumn Budget is not an admission that the April Budget was misconceived. It will be open to criticism only if it departs from the settled principle of Mr Butler’s chancellorship, namely to combine restraint on expenditure with incentives to production.” Some newspapers predicted in their news reports of the forthcoming Budget that Mr Butler would increase purchase tax on cars, television and radio sets and luxury goods.