AN ASTUTE BUDGET

The Budget was received without enthusiasm in Parliament and the press. It was not as tough as some had expected, but it was, nonetheless, an astute performance based upon a calculated risk. .

It is clear from what it did not contain that the Tories regard it as too early and too dangerous to take steps which may bring the expansion to an untimely halt. After all, that Budget day should be in April is an accident of history, and economic trends do not fail in such a way that this time of year is the best one to make judgments about the future course of the economy. But all papers drew attention to the most significant sentence in the Budget speech in which Amory said: ‘I think it likely that the time may soon arise when it would be right that we should take other steps to restrain further expansion of private credit, and we stand ready to do so.’

That means that the Goverment will use the most direct brakes on the expansion, if pressure on prices or the balance of payments makes them necessary—i.e., higher interest rates and restrictions on bank lending. It is already getting more difficult to borrow through the banks. Why alter tax rates, court unpopularity, and perhaps have to change them later when the job can be done by other, less obtrusive methods?

The option for mainly monetary measures means that it is hoped that already developing pressures will not get out of hand. That’s where the risk comes in.

The Chancellor stressed the dependence of British expansion on external factoss. The growth in world trade permitted a rise in British exports last year, despite a decline in Britain’s share. Nevertheless, there was a smaller surplus on the current balance of payments than had been expected, and export from Labour’s locker, and leaving little to fight about in Parliament, there is no doubt that outside the concomitant to the Budget will be an attempt to stiffen resistance to wage claims. In relation to what has happened to profits and wages during the past 18 months, the small increase in profits tax— which isn’t going to seriously worry industrialists—is a decoy to make it appear that there is ‘equality of treatment’ and provide an argument against substantial wage increases.

For these reasons the Budget is an adroit political move, too much so for some of the duller-witted Tories to understand, and which can only be effectively dealt with from a principled socialist basis very far from that to which the Labour leaders are committed. No wonder they were cheering some of the Budget measures; why, even they could scarcely have done better in defence of British capitalism!— crocodile tears for the neglected old-age pensioners notwithstanding.

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