By Pat Jordan It has been argued thet one ef the reasens for the mildness ef the budget was the fact that ifr, Maudling nad in his pesssssion the March trade figures. These were suppesed to have convinced Mr. Maudling that the ceuntry was doing well and that the warnings given by various bodies that the inflationary pressure had to be relieved by decreasing purchasing power were alarmiat. 4 close ecrutiny af the figures, however, weuld suggest a diffsrent picture. When the seneatfdonal trade gap of £120 mo, for January was announced, the Tories were quick te peint ont that thie was ‘freakish' and that, anyway, one must consider not a single month but the position over # period. What happens when we apply this latter suggestion? je find that the import figures for January-March are 7% up on the previous 3 months, 13% higher than the 1963 menthly average, and no less than 21% higher then fer the same three months last year. But what of exparte? Thene were 2% higher than the last three months of 1963 and 5% higher than the average for 1963 (it is impossible te compare exports with last year's January-March quarter figures because of the abnormally bad weather). Putting these two seta of figures together we find that not only are importa going up faster than experts but that the rate at which the gap ie widening ia alae incraasing. Whether or not this tendency will continue is hard to say. Twe factora are involved in the increase in imperts: (1) the so-called etockbuilding, whereby manufacturers increase their atocks in anticipation of increased production later; and {2) the incremsing succese of fereign manufactured geode in Britain's markets. Seme experts argue that the firet factor has new played itself out, but there hae been an unfailing tendency for iuperte ef raw materials and senimenvfactured goeds to outstrip experts in times of beem. The second facter ia a reflection ef the growing competition for markets because ef excess capacity. Either way they ameunt te ene thing: British capitalism is, for a variety ef reasons, relatively ‘inefficient’ as compared with meat of ite rivals. On the other side, experta are now beginning to feel the effecta of the increasingly ‘pretectionist: aspect of the Commen Market, In 1963, it was precisely a very rapid increase in experts te the Commen Market countries (in particular France
and Italy) which accounted fer most of the
imprevenent in the position, This will become
mere and mere importsnt aa time goes by - the
alternatives, ETA and the Cemmenwealth, are
nething like as promising because their
economies show no sign of increasing at the
same rate as these of the 'Six'.
Having said this it is unlikely that there
will be an immediate balance of payments crisis.
Sterling as a currency ia streng just now becruse
ether ourrencies are facing difficulties
(Anflationary. pressures, etc.) and therefore
a run ageinat the pound is unlikely in next
nenth er ee. In the event of the trade
position getting very bad Britain could, ne
deubt, cover the pesitieon by an IMF loan. How-~
ever, it will be the late summer position that
ceuld provoke a crisis. By then ather currencies
may be atronger, and by then, if the Tories
have failed completely te step the inflationary
tendency, fereign bankers may very well decide
that their money could mere safely be
deposited elsewhere.
The combination ef the withdrawal ef foreign
deposits snd a bad trade pesitien could induce
a serious balance ef payments crisis on the eve
of or juat after the election of a Labour
Government, Suspicious pecple might suggest
that this would not be accidental timing.
A Lesson From Sweden from James Wilcox
On April 7th the Swedish I.1L.0. {T.U.C.,
concluded a general wages agreement with the
Federation of Employers. The agreement exposes
the folly of those in England who suggest that
the English Trade Union Movement should involve
itaelf in arrangements taken from the Swedish
model,
The two year agreement allows for a 1.3%
riae in wages in the firet year, and 3.4%
for the second. The extreme modesty of the
planned wages increases does not follow a period
of rapidly rising wagest in the previous two
years the avarege rise was 2.75% and 2.25% rese
pectively. The Swedish agreements make no
adequate provision for profits, which, in the
last mix year, have risen twice as fast 2s wages.
Mereover the Swedish workers are submitted to a
rigorous labour discipline, Most forms of strike
action are illegal, including the recent blacking
of South African goods by dock workers. On the
other hand, the employers mre not subject to any
form of inspection or oontrol.