INFLATION DISTORTS BRITISH ACCOUNTS: A RECORD SURPLUS

Greymouth Evening Star, 3 April 1948, Page 6

INFLATION DISTORTS BRITISH ACCOUNTS: A RECORD SURPLUS

LONDON, April 2. The surplus of £635,000,000 disclosed with the closing of this year’s public accounts is by far the largest in British financial history. The nearest approach to it was in 1920, when the surplus was a little more than £230,000,000. In both cases, the surplus has been largely caused by extensive sales of war equipment. Eleven days ago, the surplus stood at more than £BOO,OOO- - but heavy payments during the final week of the year reduced the figure by £145,000,000. This included a prepayment of £110,000,000 to the Argentine Government for meat supplies during the coming year. Dr Hugh Dalton’s 1947-1948 Budget estimated the year's surplus at £269,000,000, and although this was increased to £318,000,000 in the Supplementary Budget produced last November, even this estimate has been doubled. Decrease in Expenditure This is the result not only of substantial increases in revenue, but of a decrease of £250,000,000 in expenditure, compared with the estimates made by Dr Dalton at the beginning of the financial year. The biggest increases in revenue were in income tax (which brought in £33,495,000 more than anticipated), Customs (£17,036,000), surtax £91,220,000), excise (£66,200,000), and profits and excess profits tax (£82,000,000). On the expenditure side, the defence services spent £45,000,000 less than expected. During the year, chiefly as a result of overseas borrowing, the Government. was able to reduce the floating debt by £412,700,000. The Financial Times comments that the Treasury has no reason to indulge in back-slapping- The revenue results, it adds, disclose a serious failure by the Treasury and othei departments to estimate the e^J ent to which the revenue figures would be distorted by inflationary forces. Incomes Magnified “The fact that the income tax receipts were 10 per cent, above the estimates,” says the Financial Times, “does not reflect a corresponding increase in the productivity of the country, but simply that incomes have been magnified in terms of money. Again, receipts from the sales of war stores were largely under-estimated because the public departments failed to realise the high prices these goods would bring. “The chief fact emerging from the accounts is that even with a revenue | surplus of £635,000,000 and overseas I borrowing amounting to £800,000,-1 000, the Government has been able to ( reduce the floating debt by only £412,000,000 in 12 months.”

U.S. Troops in Trieste Five thousand American troops, with full battle equipment, will parade through the Free City of Trieste on Tuesday, American Army Day. Although the parade was planned some time before the recent developments in Trieste, the American military command considers that a demonstration of this nature will allay the fears of the Italian population that they will not be defended against any possible Jugoslav coup. —London, April 1.

Philippines Defences The Defence Secretary (Mr Ruperto Kanglepn) disclosed today that the Philippine Army’s General Staff was working out plans to prepare the Republic’s forces for action in case lof war. He added that an emergency 'outlay of 65,604,000 dollars would be sought to equip and put in the field, in the event of war, about 45,000 men in three divisions.—Manila, April 1. Canadian Aid To Britain Arrangements for financing British purchases from Canada have been extended from March 31 to April 14, according to a Government announcement today. This action means that Britain will be permitted to continue to draw from her Canadian credit to pay for the foodstuffs and raw materials which she is buying from Canada. The extension Js designed to provide Britain with funds until aid under the European recovery programme becomes available in about a fortnight.—Ottawa, April 1.