ECONOMICS LOOSENING OF CREDIT SQUEEZE IS NOT

The Newsletter, vol. 2 no. 62, 2 August 1958 · scan page 3

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‘ THE measures announced recently by Amory to make it easier for business men to borrow from the capital market and the banks mean that the prospect of a sharp downturn in the economy is now accepted by the Government.

The state of capitalist economy depends upon the assess_ tment which business men make of the future.

If they are convinced—and the recent FBI survey snows that many are—that markets are going to contract and_profitability fall it will take a good deal more than the measures so far announced to induce. them to step up their investment.

Put another way—easier borrowing will be outweighed by falling profit expectations.

It can be.assumed, too, that credit will have to be made still easier, with perhaps a further cut in Bank Rate in the * offing.

‘Bumping along the bottom’?

In fact it is doubtful whether the 7 per cent. credit squeeze was a major factor in the decline in business investment, and equally doubtful whether it can be reversed simply by making credit easier to come by.