INFLATION IN BRITAIN

Press, Volume XCIII, Issue 27873, 23 January 1956, Page 16

INFLATION IN BRITAIN

GOVERNMENT POLICY ATTACKED

“OVER EMPLOYMENT MUST BE REDUCED” (N.Z. Press Association—Copyright)

LONDON, January 19. Iri a strong attack on the British Government’s handling of the financial situation, Mr A. W. Tuke, chairman of Barclay’s Bank, says that while over-full employment remains in Britain there can be no remedy for inflation. “Britain is now living, with over-full employment, which I believe is at the root of the whole trouble. For most of the last year there have been at least two jobs from which every unemployed man could choose—which is bad for both management and men. “When this state of affairs is cured and healthy competition restored we shall probably not hear so much of identical tenders and other alleged abuses of commercial monopolies. Equilibrium can only be achieved when the, number of unfilled jobs falls nearer the total number of unemployed.” Mr Tuke, whose annual statement is regarded ,as one of the most outspoken from any leading financier, said: “The Government is full of good intentions, but deeds, not words, are required. "Over-full employment is at the root of the whole trouble, and no remedy for the present situation will be found while it remains, however much advances of banks may fall under the pressure of the credit squeeze, because other influences will have continued to pull more strongly in the contrary direction. “Appeals and exhortations are no substitute for resolute action and reliance on them comes ill from a Government which calls itself Conservative.

“The failure of the general public to take the credit squeeze seriously in the first half of the year was most unfortunate, but the policy should have been applied from the start to the whole economy. When the autumn budget came the nation braced itself for a shock and was met with a couple of pinpricks. “The Government is on the horns of a dilemma. If it covers any of its* expenditure by borrowing it certainly will cause inflation both- in theory and in practice; if it covers it by taxation, in theory it avoids inflation but in practice inflation occurs ag a result of its action.

“One could sympathise with the Government if it were not that there is a solution lying ready to hand—to reduce its own expenditure.’’