Economists call on U.K. Govt to modify policies

Press, 30 August 1980, Page 8

Economists call on U.K. Govt to modify policies

NZPA-Reuter London An urgent plea was made yesterday for Mrs Margaret Thatcher’s Government to modify its severe monetarist policies to avoid making Britain’s recession even worse. The plea came from the National Institute of Economic and Social Research, an influential non-Govern-ment body, after news that Britain’s unemployment had passed two million for the. first time since the Depres-; sion. In its latest quarterly report the institute urged that the Government cut taxes or increase public spending to avoid worsening the recession which has already caused widespread lay-offs in British industry. The unemployment figures caused a storm of criticism from union leaders and the Labour Party Opposition against Mrs Thatcher, who has been following the strictest tight-money policies in the industrialised world to combat inflation. But Mrs Thatcher and her Ministers have laid down that there will be no “U--turn” reversal of their policies.

The institute said that if workers heeded Government appeals for pay restraint the recession could deepen because of another fall in consumer demand. “If it is not to have the effect of making the recession even worse, any. deceleration in the rise in money earnings needs to be accompanied by either an increase in Government expenditure or a reduction in taxation,” the report said. “The prospects for unemployment in the United Kingdom are now probably the worst since the 19305.”

Whitehall statisticians injected another note of gloom in Britain yesterday after the publication of the unemployment figures. Despite general euphoria in official circles over the country’s current trading position — thanks mainly to the strength of Sterling compared with the American dollar — travel and tourism showed a deficit of $60.5 million in June. It was the first time in recent history that this major factor in the country’s “invisibles” trade had gone into deficit. ■

It means that far more Britons are leaving the

country for holidays than tourists are arriving.

Overseas visitors to Brit-] ain spent $665.5 million in] June, Department of Trade figures said, while the British abroad spent $726 million.

Despite the recession, 10 per cent more Britons took foreign holidays in the first half of this year than in 1979. This was the steepest rise for at least five.years, and according to ■ the “Guardian” caused official astonishment.

A survey by the English Tourist Board found that 22 per cent more people took holidays away from home in Britain. “It’s amazing how people will not give up their holidays,” the board said. “The market is remarkably resilient even in difficult times.” Western Europe was the main destination for foreign holidays but there was also a'23 per cent rise in visits to the United States — cutrate air fares, particularly to New York and Miami, were the main contributors. A book published yesterday’ predicts that only 10 per cent of Britain’s present

labour force will be needed by the turn of the century.

Professor Tom Stonier, professor of science and society at Bradford University, who contributed to the book “The Micro-electronics Revolution,” says the microchip will continue to make an increasingly dramatic impact on all industries. The only way to tackle future unemployment is through a massive expansion of the education system, he says. New technology, such as office robots, will hit both the shop floor and manager ment, but he predicts new job opportunities in the “knowledge industries.” “The biggest problem confronting British society at the moment is, how to transfer labour from the manufacturing industries, where jobs are shrinking at an alarming rate, into the knowledge industries, which need to be subsidised by the Government,” he says in the book.

An expanded education system, with the aid of Government subsidised research and development, could create jobs for millions and provide the knowledge to increase the nation’s wealth.