Britain rules out reflation

Press, 23 October 1984, Page 37

Britain rules out reflation

NZPA-AAP London Britain’s Finance Minister, Mr Nigel Lawson, has ruled out reflation of the British economy as a way of ending unemployment, now at record levels. Mr Lawson, interviewed on British commercial television, said the Conservative Government was not prepared to create jobs by injecting demand and running up a larger Budget deficit. “That would simply lead to a resurgence of inflation,” he said. “The most important thing is getting inflation down because inflation is a killer of jobs.” September unemployment was 12.9 per cent, while inflation for the year to the end of August was 4.5 per cent. Mr Lawson said interest rates were already too high and would be pushed even higher by a significant increase in the Budget deficit. To help stimulate job creation, the Government is considering further changes

in the supply side of the economy, including potential alterations to the Employment Protection Act, to give employers more freedom in their dealings with workers. Mr Lawson said rapidly increasing real wages had been a major factor behind rising unemployment but he was not advocating a cut in real wages, just a slowing in their growth.