Effect Of Sterling Aid On The Little Man

Press, Volume CVIII, Issue 31729, 12 July 1968, Page 11

Effect Of Sterling Aid On The Little Man

(N.Z P A.-Reuter—Copyright) LONDON, July 11. The SUS2OOOm aid for sterling announced this week may have had a dramatic effect on the financial world, but today the ordinary Briton, working in a factory, shop or office, is asking what effect it is going to have on his life.

The answer is in two parts —short-term and long-term.

The immediate effect is that life for him is going to be no easier. It may even be harder if the Government decides it must tighten the austerity clamp still further to show the world that Britain intends to behave itself and not live beyond its means.

The new aid demonstrates world confidence that Britain will do just this. If that confidence is betrayed, then an-

other, bigger crisis must follow. But in the long-term, when world confidence has been fully restored, and maintained, Britons may look forward to a gradual easing of the economic restrictions imposed on them for four years in unavailing attempts to straighten the nation’s budget. The new aid, huge as it is, is not a gift which can be used to wipe out Britain’s overseas debts, now between £4ooom and £sooom.

These still have to be paid for with profits from overseas trading. The devaluation of sterling has given a fillip to exports, but much of this benefit has been eaten up by the mounting cost of imports. Much progress has already been made towards increasing home production and using substitutes instead of buying from overseas.

The trade gap, however, still remains ominously wide —about £9om a month, and the Government must do something to reduce this if it is to keep faith with its overseas banking friends.

Some economists advocate import controls which would deprive people of foreign luxury goods; others see higher taxation on imports as a controlling factor. Whichever method is chosen, the man-in-the-street is either going to have to pay more or do without.

The Government is also expected to initiate moves for switching more home-pro-duced goods from the home market into the export market, so that more foreign currency will be earned: and there are several ways in which the Government can do this, one of them by reducing the purchasing power of the public. What the new aid programme has done is to give the Government a breathing space in which to work but these policies and to give them time to show a return. To lift the burden of austerity suddenly from the manin - the - street because SUS2OOOm is in Basle for the asking would be to destroy

the faith the bankers of the world's wealthiest countries have placed in Britain's future. So it looks as if the little man Is going to have to go on suffering for a long time, through wage restraint, credit squeezes and the other sophisticated forms of control which modern governments can impose to further economic polity.