INFLATION IN BRITAIN

Greymouth Evening Star, 12 September 1945, Page 5

INFLATION IN BRITAIN

PEOPLE DEMAND SUPPLIES TIRED OF GOING WITHOUT (N.Z.P.A. Special Correspondent) (Rec. 9.5 a.m.) LONDON, September 11. The menace of inflation is hovering over Great Britain and concern is growing regarding its possible descent. Briefly the position is that throughout the war the British public saved in securities and deposits £9,000,000,000, of which £3,750,000,000 comprises “small savings.” To-day, after the long, weary drag of war, abstinence, rationing, bombing and fair wear and tear, there is a gigantic consumer demand throughout the country. But before this can be met with any degree of satisfaction Britain must build Up an export trade to extricate itself from the position as a debtor nation. This point was emphasised by Sir S. Cripps, President of the Board of Trade a few days ago, when he said: “hi the months and years that lie ahead it is going to be difficult for our people to realise that by loregoing the immediate advantage of a bigger home market and so a higher standard of consumption, they are in fact making sure of better and far more stable standards in the future, when we have won through the transition.” He added it was reasonable for people to expect and demand more foods, furniture, clothing and household commodities of all kinds. No people in the world had done so much to deserve those better standards of comfort, but the price of that increase of supplies would be inability to maintain even the present inadequate volume of exports and so the loss of even more foreign markets. What is going to be the reaction of the people generally, particularly when they have money in their pockets? Willing to accept any sacrifice in war, will they be prepared to continue to do so for a few years longer? It is a notable position, already reversed from the days when the country was ahead of the Government in demanding a bigger war effort and sacrifices. To-day there is ignorance about the shortages which many believe due to the wilful stupidity of the Government in holding up supplies, and also a rising tide of criticism. “The public is tired and ignorant,” says “The Economist.” “There is no Dunkirk spirit on the reconstruction front. Moral sanction of the war which alone supported controls and made possible the crushing wartime taxation, has gone, and nothing has yet taken its place. To fill the void is one of the most urgent tasks before the Government. It is a task that grows more formidable with every moment of delay, and already —mainly, no doubt, in consequence ol the election hiatus —it has been postponed too long.” “The Economist” adds: The crying need is for an intensive publicity drive to bring home to the people the concrete realities of transitional problems —to demonstrate the importance of restraint by consumers, hard work from workers, and patience from all. In addition, the pent-up savings of' the people are an added complication that may result Iron? post-war credits and gratuities paid to the demobilised servicemen wmch may be expected to add to the “inflationary pressure,” while demands for increased wages and income tax reductions will be an additional influence. Particular interest is being taken in the prospect of INCOME TAX REDUCTIONS,

especially in view of Mr. Herbert Morrison’s comment that the present rates on better paid workers are so high that many are tempted to accept the undesirable view that it is not worth earning more, also his observation that taxation on the profits of the “unsocialised sector” of industry might be so high as to leave insufficient incentive to reduce costs and increase turnover. Uncertainty about the Government’s taxation policy is reported to be impeding industrial recovery and expansion. It is hoped the Chancellor of the Exchequer will present an interim Budget in about six weeks, and exnectaHn’w are forming on the possibility of the restoration of the income lax allowances, reduction of the excess profits tax from 100 per cent, to 80 or les-.:, and the reduction of income tax by I/- or more. There is some support for the contention that if heavy taxation is tending to produce go-slow tactics, then tax relief would be preferable to higher wages. But the question still remains will the people be content to continue saving and limited buying, or is there going to be a rising trend of inflation coupled with increases in such practices as black market dealings, which are now ceasing to be regarded as a moral crime. This week the National Savings Committee is launching its twice postponed 1945 savings drive, and it is stated to be at once the most difficult and most vital campaign of the whole war-time series. While no doubt many people arc willing to continue saving, it is too much to expect them not to spend a proportion of their money, for instance, on recreation, and it is expected that this spending will continue and will increase in both the world of

ENTERTAINMENT AND SPORT,

particularly the latter, which was naturally limited during the war. Already there has been record Derby betting, while the general feeling in the sports world is there will be a boom and that there will be big money invested, which in crowds ana cash will dwarf previous records. These forms of spending may provide something oi a safety valve to inflationary spending, though heavy spending on American films still does not improve Britain’s dollar position. Another form of using spare money is reported to-day in the “Daily Express” which slates a fantastic new London has come to life in the West End—the London of gambling schools on pavements, secret deals, where the best blends of whisky are bought by men in uniform at prices which make last week’s black market seem childish. In picketed gambling schools there is as much as £6O in poker kitties. Black market racketeers are seen selling one English pound for two American dollars, while jewellery of all descriptions is readily changing hands. Many buyers ana sellers arc soldiers who have plenty of money. Many, including Americans, are waiting to return home and have nothing to do meanwhile. It would be incorrect to say inflation has begun yet, but it is borne in mind that in the 18 months after 1918 the average increase ol wholesale prices was twice as fast as during the previous war years. Conditions to-day are different in many ways, but responsible sections consider the position must be carefully watched- and similar repetitions guarded against.

CONTROLS APPEAL

LONDON, Sept. 11. An appeal to the Government to relax controls as far as possible, commensurate -with controlling inflation land ensuring fair distribution, was made by Mr. J. S. Dodd in his presidential address to the Association of Commerce.

Mr. Dodd, describing the manpower shortage, declared that a galling situation had arisen wherein firms had plant ready and large orders and materials on hand, but had not the labour to produce the finished goods. “Every employer knows the necessity for exports to the country, but has the fear that overseas competitors may be in the market well ahead of tyim,” he said.