BRITAIN’S CRISIS

Te Awamutu Courier, Volume 75, Issue 6442, 5 November 1947, Page 5

BRITAIN’S CRISIS

CHANGING MONEY VALUES AFFECTED IMPORT CUTS W,'hy did not the British Government cut down imports months ago ? The answer is that, in fact, the Government has been restricting imports for the past two years to levels well below the pre-war figure (states the British Labour Party’s pamphlet, A.B.C. of the Crisis). In 1938 Britain imported goods worth a total of £835,000,000. At the prices charged in 1938, her imports in 1946 amounted to only about £575,000,000, or a reduction of one-third. But because prices of imports have risen so much the people had to pay £1,110,000,000 for these goods in 1946. Through its import controls the Government has thus been keeping imports down to little more than twothirds of the amount imported before the war, a saving which has inevitably meant shortages of raw materials for British Industry and shortages of foodstuffs for the British housewife.

WJien the Government reviewed its import plans at the beginning of the year it recognised that the level of imports must be raised to about fourfifths of the 1938 amount to secure raw materials for industry and more foodstuffs for the housewife. It therefore budgeted for an increase of £350,000,000 in the import bill, recognising that this involved risks in view of the continuing rise in import prices and the effects of the fuel crisis on Britain’s exports. Purchases in Bulk To limit this rise in prices the Government entered into negotiations with foreign suppliers for purchases in bulk, often covering a period "of years. These bulk purchase agreements have been very valuable, giving Britain Canadian wheat and Argentine meat, for example, at prices well below those paid by private importers. But, despite such agreements, the prices in many things imported by Britain continue to rise, and the Government had to revise the import budget in June of last year. The Government reduced the import budget by £50,000,000 which had been ear-marked for increasing the food supplies of the British people. But, with the rapid drain on dollar resources in July and August, it became clear that these cuts were not enough. In deciding what further import cuts could be made, the Government had to solve two exceedingly difficult problems. First, it had already eliminated nearly all the frills in its programme, and any big new reductions would have to come in foodstuffs and raw materials. A Vicious!Circle To cover completely the gap between exports and imports the Government should have to cut imports by nearly a third, and such a reduction would clearly land the country in a vicious circle; cutting imports of materials and foodstuffs would mean less exports, less exports would necessitate further import cuts, these would further reduce exports, and so on. The second difficulty was that to make all-round cuts in imports might well make it impossible for some countries to buy any of Britain’s exports necessitating further import cuts and producing another vicious circle. The Government’s revised import plan provides for a cut of up to £164,000,000 in the yearly expenditure on imported goods. A sum of up to £144,000,000 is to be saved from the proposed expenditure on food, though this cut may be scaled down if exports increase fast' enough to enable us to buv more from the Commonwealth and Europe. In the long run, of course, British agriculture will supply more of what the country now imports, but the full savings here will not be secured for a further four years. Of the other cuts, up to £5,000,000 will be saved on petrol imports, another £10,000,000 on the timber imports planned in June of last year, and £5,000,000 on the small remaining imports of consumer goods. Invisible Services The Government is also making big savings in expenditure on the “invisible” services the country receives from abroad. This is being reduced by no less than £64,000,000. The Government will ultimately save at least £11,000,000 annually on imports of American and other films. Another £33,000,000 will be saved by confining holiday travel to the Commonwealth (apart from Canada) and countries willing to “exchange” tourists with Britain, and by tightening the restrictions on foreign currency drawings. Another £20,000,000 will be saved on overseas military expenditure by reducing the forces; and it is hoped to make additional savings (perhaps another £80,000,000 yearly) by reducing expenditure on Germany. In making these severe cuts in imports the Government has paid special attention to reductions in Britain’s purchases from the American and other areas which sell Britain far more than they buy from her. Much must still be bought from those areas, and Britain must expand her exports to them to pay for imports. But, clearly, in future. Britain must buy more from countries willing to take her exports. She must seek, too, to extend her European trade agreements and try once again for an agreement with Russia. There can be no doubt that Britain will make better bargains when she can guarantee the exports of coal and machinery which are vital to the expansion of production and trade in European countries.