GOVERNMENT MEASURES CANNOT AFFECT

Ir is now taken for granted that the recession is going to continue weil into i959. The question is: How bad will it get?

It is plain that the government response was slow, and that the measures so far put in hand cannot have any appreciable effect on the worst-hit industries until the middle of next year.

Nor does private business look like steadying up its own investment plans before then.

The contradiction in foreign trade has hardly begun to have its effect. It is likely to continue as under-developed countries run into increasing payments difficulties and as recession spreads in Europe.

The reliefs given to the consumer goods industries will only have a once-and-for-all sustaining effect. They do not, in any case, provide help for those, industries most in need of it. ;

Real slump quite possible The expansion of bank credit which has been taking place, as well as the high level of share prices, may in time become sources of weakness. ;

Certainly a deep downward slant into a real slump is quite possible. Continued slowing down of private investment, coupled with a sharp fall in exports, could stoke up a cumulative movement which it would be difficult to arrest by orthodox Keynesian methods.

Excess labour would be dismissed, stocks would decline, consumer purchases would slacken and a new run on the pound would take place.

To say this is a possibility is not to say that it is the most likely alternative. If it does not occur in 1959 it will be because the forces of classic capitalist crisis have been checked, not because they have not been operating.

The continued high level of activity in important sectors of the economy is, for the moment, sustaining the level of activity as a whole. Cars and consumer durables play a key part here. FRANCE COMMUNIST AND SOCIALIST MILITANTS From Our Paris Correspondent