Down-Turn In U.K. Economy Expected

Press, Volume CIII, Issue 30636, 30 December 1964, Page 9

Down-Turn In U.K. Economy Expected

(Special Correspondent N.Z.P.AJ LONDON, December 28. A down-turn in Britain’s economy is forecast in 1965 by the economic intelligence department of Barclays Bank.

The department says in its latest report that “most information’’ points this way, particularly if the car industry reduces its output as expect edit also expects that speculation over the corporation tax, plus the uncertain business outlook, could well affect industrial development All sectors of the economy will be hit, either directly or indirectly, by the higher interest rates and by the inevitable tightening of credit arising from the banks’ shortage of liquidity and from the recent directives concerning less essential bank lending. A further factor making for a down-turn is the increase of 6d in the standard rate of income tax from next April —a measure which is likely to be reflected by lower retail sales. An improvement in the trade and payments balances

was expected in 1965, even if no remedial measures had been taken, the report states. “Therefore a combination of this movement, of the effect of the import surcharge and the likely running down of stocks because of the tighter credit conditions must result in a noticeable reduction in the trade deficit. “This improvement, together with the increasing evidence of the authorities’ intention of pursuing a deflationary policy, should lead to a marked recovery in the pound and to a rise in the gold and convertible currency reserves. “This in turn will give the Government time to implement its longer-term plans, including the establishment of a workable incomes policy, for strengthening the economy and avoiding the recurrent crises which have plagued the country since the war.”