THE TREASURY'S SPLIT MIND
RITAIN'S overseas trade fared badly in January. The D import bill was the highest on record for any month, with the exception of March last year. Exports still showed little sign of going ahead strongly, and the trade gap at £74 million is far too wide. It is at least £25 million more than we can afford. In short, all the attempts made so far to stem inflation have as yet come to very little. In spite of increases in the bank rate in January and February, 1955, the 'further measures' last July, and the supplementary budget in October, we are not yet even within sight of stopping inflation. Last year prices increased by 6 per cent. and wages by 7 per cent., and com- pared with twelve months ago there is an extra £150 million's worth of Treasury Bills in the banking system. The gold and dollar reserves have shrunk by more than £600 million, and. in the immediate future we face immense claims for higher wages from many of the unions. For over twelve months the Treasury's attitude to wage claims has been schizophrenic. To the world, it has tried to show unconcern. Inwardly it must be very worried indeed. It certainly should be, for the climate in which such large claims are possible is the creation of Government policy. Bad budgeting, bad forecasting and maladroit handling of Government finance have all played their part in provoking the present enormous wage claims. That is the point which the Treasury has not yet fully grasped. One ray of hope, however. These depressing trade figures offer their own comment on Mr. Macmillan's recent appeal to the country for restraint, and should, therefore, put paid to the bad old idea which still persists in the Treasury that public relations make an effective substitute for economic policy.
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