The Press WEDNESDAY, AUGUST 30, 1967. Britain’s Political Economy

Press, Volume CVII, Issue 31461, 30 August 1967, Page 14

The Press WEDNESDAY, AUGUST 30, 1967. Britain’s Political Economy

Mr Wilson’s Cabinet reshuffle comes at a crucial time for his Government, politically and economically. Since the General Election last year, when Labour was returned with a substantial majority to the House of Commons, public opinion polls have shown a steady deterioration in the party’s popular support By midAugust Labour was polling little better than the Opposition. It is poor consolation to Mr Wilson that his personal rating is better than his party’s and better than Mr Heath’s; personal popularity is no substitute for political power, which is steadily slipping away from him. Unless he can check and reverse this trend soon, he faces the prospect of becoming, at best, Leader of the Opposition once more.

Britain’s economic difficulties are the root cause of the Labour Government’s loss of popularity. The balance-of-payments troubles which figured largely in the downfall of the last Conservative Government have continued to plague its successor. The firm measures adopted by the Labour Government since it took office have brought a respite from the sterling crisis, but at the cost of rising unemployment and stagnating production and investment. Mr Wilson’s decision to take more responsibility for the control of economic policy shows a realisation that Labour’s political stocks will recover only when the country’s economic problems are solved. His dismissal of Mr Douglas Jay from the Board of Trade shows Mr Wilson’s desire to surround himself, in his coming talks with die European Economic Community, with “ good “ Europeans ”.

It may be six months before the outcome of Mr Wilson’s economic policies is clearly discernible in industrial output and unemployment figures; and it will probably be three months or so before the result of the current approach to the E.E.C. is known. But the coming month may prove to be even more decisive for Mr Wilson and his party. Traditionally the month of greatest strain on the British balance of payments, August is nearly over, and there has been no sterling crisis. The Middle East situation has, oddly enough, relieved Britain’s balance-of-payments difficulties—temporarily. Payments for oil normally carried through the Suez Canal were postponed by several weeks as the tankers plied slowly round Africa. Other changes in Britain’s payments and receipts of foreign exchange were, on balance, favourable to the July figures; like the oil payments, these improvements were mostly at the expense of the figures for August, not due to be released for three weeks, and succeeding months. The seasonal strain on sterling will be felt this year in September instead of in August; and there can be no question of easing credit restraint, of stimulating internal demand, or of providing more jobs for the unemployed next month. Having staked so much on maintaining the value of the pound in the international exchange markets, the Labour Government must now be preparing to fight next month’s battle of the exchange rate, hoping that it will be the last. This is a crucial test for Mr Wilson and his Government—and for

Britain. By identifying himself more closely with Britain’s economic policy, Mr Wilson has virtually staked his political future on the country’s economic performance over the next few months.