The Grey River Argus MONDAY, January 7, 1946. BRITAIN’S ECONOMIC PROBLEM.

Grey River Argus, 7 January 1946, Page 4

The Grey River Argus MONDAY, January 7, 1946. BRITAIN’S ECONOMIC PROBLEM.

Churning that, if demobilisation were Quicker, they could employ more labour, the capitalists in Britain appear nevertheless inclined, like those here, to base their political reaction against the Labour Government upon a cry for retrenchment. _ Quoting the prospect of expenditure for this financial year exceeding five thousand millions, with a deficit of two thousand millions, they doubtless wish reductions without regard for any consequent growth in unemployment, calculating perhaps that such a growth would cheapen labour, and facilitate competition on markets overseas. Meantime it is .(■Lujectured that the national income may be falling, but it would seem that export trade is picking up, while imports are being designedly limited in the interests of’ a 'balance. A Government spokesman, Mr Morrison, has just assured Canadians that, while austerity meantime remains necessary, its objective is a successful economic recovery as soon as full settlement with North America has been finalised, with a development of exports. No doubt this war will not leave Britain’s economic structure as it was before the war, and there may be need to produce at home more of the foodstuffs whi'cli have hitherto been imported. To do so would maintain many people and lessen at the same time the need to export so much. This idea is, of course, rank heresy to Lord Beaverbrook, who evidently expects Britain to continue on a foundation of cheap imported food, low wages, and competitive exporting on the pre-war scale. His press questions the Bretton Woods plan, of reviving the finance international, at least insofar as it might entail a modification of the imperial tariff policy Yet, admitting that the United States might under the Bretton Woods arrangement, be able to prevent the retention of a closed trading system, some degree of preference should still remain possible. So long as exchanges balance, Britain will retain Dominion markets to the extent she offers markets to the Dominions. It is so in our case, and Lord Beaverbrook’s tears-over the idea of New Zealand exporting anywhere except to Britain are rather lugubrious. A New Zealand proposal , for reciprocity with America, and eastern countries is quoted by his press as a reason for reconsidering the Bretton Woods commitment, but nothing is said of its counterpart, the huge American loan. If, indeed, that loan, inevitable as it has been reckoned, can be had without an American currency dictatorship, it will admittedly be all the better. but there is also the American tariff tradition to consider. It will not be easy to have reciprocal trade between this country and

the United States on any great scale. Hence the wisdom of seeking similar trade in the East, where the dollar might not prevail over sterling. Britain certainly will have a struggle to regain her pre-war export level, but Japanese and German competition will remain largely out of the way for a long time, and at the same time the oversea supply ol raw materials and food will be fully up to requirements. Thus with a continuance of war time food pi oduction and also greater home consumption of all- home products, such as those for housing, the necessity to export may lessen appreciably. No doubt, certain interests, such as. motor car manufacturers, will agitate in their own interests, which arc not reallv the most important ones. Shipbuilding, textiles, heavy machinery, and various other metal industries will recover as a matter of course. New Zealand must certainly take into account the possibility of not being able to continue selling seven-eighths of its exports to Britain, and, like Britain, must therefore look for Greater self-sufficiency and for new openings elsewhere. Before a .complete estimate of the whole post-war trading situation can be made, it remains to be seen what America’s policy, will bo. . It will, as much as Britain’s, require to be a reciprocal policy, so that if the new international monetary arrangement is not consistent with that principle, there must follow some other arrangement.