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POUNDING
(Conrinued
jiwn page
J)
three-hour sh ip ride from Belgium
to placean orderofscveral hundred
dollars worth of wallpaper and re–
turn a weá or two later to pick it
up.
ewly married couples have
been known to bri ng over vans on a
spending
~prec
to furnish t he ir
houses at Britis h prices.
U ttl e Faith in Britain's Future
Bchi nd thc record sales, however,
lics a far more disturbing p icture -
fo r the British if not for the Conti–
nentals. There is little doubt that the
cu rrcnt orgy of foreign spending has
been brought about by the sharp
decline in the va lue of the pound
s terling on the foreign exchange
markets. The fall has been sharp
and dramatic.
Perhaps initia ted by a large sale
of s terling by an oil-producing sta te.
the slide nevert heless ga ined a mo–
men tum of its own. And as the
pound fcll, imports became increas–
ingly expensive. Since Britain reli es
heavily on imports, this was very
scrio us. The higher pri ces of imports
werc reflected in a h ig her cost of
liv ing, stoking up t he already hig h
British in ll a tion ratc. lncreased in–
llation cheapened s terling and per–
suaded money managers to se ll
further.
A few days ago
l
was talking with
an American banker work ing in
London. He was s taying with a
fr icnd - a Swede. In the morn ing
the Swede phoned up' and told h is
money ma nager to sell s te rl ing. The
American bankcr asked him why be
was sell ing tha t morni ng. T he
Swede replied: "I've been sell ing
terling in th e morni ng now every
day fo r e leven ycars. So far I've not
been wrong!"
With Britain 's sad reputation as a
s t rike-bound , welfare-encrusted, in–
efficient na tion, i t seems very few
have any faith in her currency any
more, though some in Bri tain persist
in bel ieving that things aren ' t as bad
as they seem.
' 'The foreigners do not under–
s ta nd." whined the
Guardian
news–
paper vit uperatively. "Thcy fa il to
perceive the under va lued, under–
lying s trcngth of s terling- a fa il ure
44
of perccp tion so profound that they
ac tually keep selli ng thc wretchcd
pou nd. short and frcncw.:ally. day
afte r day ... so much for the snail–
eat ing, wine- will ing. sauerkraut–
munch ing forcigner ."
Such verbal abuse only serves to
cloud the picture. howcver. Earlier
thi year ha rd-headed bankcrs could
sec that Bri tain, staring a $24 billion
ovcrd raft in the face and hell -bent on
a conti nued program
or
~oci a !
wel–
fa re. was going to fa ll llat on its fa ce.
It
tookan in te rna t ional stand-by loan o f
$5.3 billion. nego tia ted in early June,
to ha lt the lid c o f stc rl ing.
Such in tcrna ti ona l rescuc opera–
tions - and they a re bccom ing a n
all-too-freg ucnt occu r rence - can
only be of real he lp if Bri tain uses
the borrowed time to iron out its
tangled wcb of cconomic problems.
A rccent report of the Nationa l
Economic Deve lopment Counci l
shows tha t Bri tain' low economic
pe rformance i no thi ng new and
that thc nation has been skiddi ng
downward for a long pcriod. The
report, in part icular, cont rasts the
performance of Brit ish and West
German manufac turcrs from 1954 ,
when both countries had a simila r
economic base. Britai n has tra iled
behi nd in nearly every respcct -
employment, capita l stock, labor
productivity, and tota l output.
In 1955 both countries had nea rly
20% of world trade. By 1973 Ger–
many had grown a few percentage
poin ts. Brita in. on the other hand,
had lost
two thirds
of its sha re.
slumping to o nly 7.5% of world
trade.
The s top-go policy of the 1960s
has not succeeded in p roducing an
expo rt- led growth . On the con trary,
it has shifted the cconomy al! the
more inward so tha t today the pr í–
va te sector (ma nu facturing and ser–
vices) is only 40%, a nd 60% of the
economy is public - pa!d for by
taxes and p rinti ng mo ney.
Wh ile France is engaged in an
all-out compe ti tion with Wes t Ger–
many. Britain seems to have given
up the s trugglc.
lt
appears lo have
gracefu lly accepted the ti tle of an
economic "also-ran" in Europe.
Whi le it can be argued that the
British a re not too badly off a t home
- they earn less but their goods cost
much less a nyway - the ir econom ic
standard i apparcn t as soon as th ey
travcl abroad. One French shop–
keept: r complaincd: ..-¡he Eng lish
say we are robbcrs and that every–
thi ng is dear. They cannot under–
s tand tbat we have to make our
price!> for Frcnch people.
lt
is not
our fa ult if the Engli h cannot af-
ford them."
'"'
Even at home thc wagc packer is
becomi ng tighter. Reccn tly in the
fight against inflation, thc trade
union,: arccptcd an annua l pay in–
crease of 4Yí% whi le the government
prom iscd some tax conccss ions. T h is
sch eme has h it top management
worst of all whilc the lowest-paid
worker has obtained a modest in–
crease. Kenneth Bond of Genera l
Electric Company Ltd. estimates
that bctwecn April 1972 and April
1977 a ma nagt.!r currently earning
.f:8.500 (S 15,300) will havc seen his
real standard of living cut in ha lf as
a re u lt of
inflation~
h igh-bracket
taxation, and a tigh t clampdown on
pay raisc .
o wonder many companies are
finding that no inducement will make
the ir execu ti ves return from posi tio ns
ab road. Mo reovcr, much of the talent
a t homc is vot ing wit h its fee t and
leaving in a new brai n drain.
North Sea Wealth -A False Hope?
By the end of the prcsent phase of
wage rcs tra int in 1977, the govern–
ment hopes to get th e balance of
paymcnts not only into better condi–
tion, but actua lly into the black by thc
end ofthe year. Reven ues from North
Sea oi l are expected to contribute
over i l bi llion to the exchequer (na–
tional treasury) th is year.
The North Sea oil should there–
fo re provc to be an undeniab le
boost to the economy. Bu t with sud–
de n
prospcri ~y
comi ng as the wage
freeze is about lo thaw. the future
may not be a ll tha t rosy. Both work–
ers a nd managcmcnt are chafing at
the bit beca u e of their decline in
living standards. and they are anx–
ious to boost their pay once the oil
money flow in.
l f
the frus trations of these sec–
tions of society result in an uncon–
trol l a b le wage e\p losion. t hen
Britain . s till lcft wi th its old and as
yet unresolved problems. could be
in a far worse mess than she is
today.
o
The
PLAIN TRUTH September 1976