British Face More Austerity

Press, Volume CVII, Issue 31542, 2 December 1967, Page 13

British Face More Austerity

(N .Z.P.A.-Reuter— Copyright)

LONDON, December 1.

The British today faced the bleak prospect of a further dose of austerity to lead the nation out of its present economic plight.

Morning newspapers contained dour forecasts of higher taxes and further restrictions on spending on top of the stringent wages policy already promised by the Government.

Several newspapers also interpreted Mr Callaghan’s letter to the International Monetary Fund, made public yesterday by the new Chancellor, Mr Roy Jenkins, as a sign that Britain had put itself in pawn to its creditors.

Typical headlines were: •Austerity—the price of that loan.”

The hard facts about Britain’s immediate economic future became apparent yesterday, when the Government

revealed a number of pledges it had given to the International Monetary Fund (1.M.F.) in seeking a new SUSI4OOm standby credit to support sterling.

Deflationary Moves

These not only confirmed the deflationary measures announced with devaluation last month, but included a promise to take whatever other measures might appear necessary to secure a balance-of-payments surplus.

The pledges, comprising a comprehensive programme for economic recovery, were given to the I.M.F. in a letter from the former Chancel-

lor of the Exchequer, Mr James Callaghan. The letter was made public yesterday by Mr Jenkins, in an attempt to kill rumours that the I.M.F. had imposed stringent conditions In granting the loan to Britain. The letter came as a severe shock to the Government’s restless Left-wing supporters. They took particular exception to the fact that the Government had promised to consult the I.M.F. throughout next year over Britain’s economic progress. For them a sign that Britain’s Socialist Government was subordinating its policies to the will of foreign bankers.

Misleading Alleged

Left-wing Labour members of Parliament claim that the Prime Minister, Mr Harold Wilson, misled them last week when he told them that the Government chose devaluation as the only alternative to a foreign loan with deflationary strings. Now, they think they have got the worst of both worlds —devaluation and deflation. The Government can expect a difficult time in avoiding a Left-wing revolt during the next few weeks.