What a future!

Nicholas Davenport

LA correspondent has asked me whether, Having written about 'What a Year!,' I could g° °n to write about 'What a future!' It is not exactly a subject for a festive season but I will

LEY.

On December 20 Charles Stahl writing here from New York predicted that one year from ,now the Dow Jones index of Wall Street will nave risen another 240 points, putting it well over 1,100, a new all-time peak. This bullish Prediction — Charles is generally bullish by nature except on gold — was based on a Projection of higher company earnings and a growth in the American GNP of 13 per cent. The extraordinary part of this prediction was that it contained no mention whatsoever of industrial relations, although there are some tricky wage settlements to be negotiated for some very important industries. In other Words, there was no suggestion that capital and labour in the United States would get at each other's throats over the perennial question of wage restraint and inflation. In the LIK no such assumption can be made: so Predictions of growth are useless. Lately our stock market has been encourLgeti by a few signs that the militant left has L'erl losing ground, that trade unions were electing more moderate leaders and that the consensus between Government, TUC and CBI which had been reached at the Chequers summit meeting would lead to a more reasonable industrial strategy, that is, with the Government and the City putting money into More promising and profitable industries. But all this has been shattered by the cynical C. brysler deal. The taxpayer's money has gone Into another lame duck — this time an American one with no good record of Management or technical efficiency. The question must now be asked whether a Labour Government, whose election manifestoes have been written on the sacred tablets of Clause 4 nationalisation can survive such a denial of Labour faith. Here was nationalisation offered 'Le it on a plate — free and with millions of P°;unds worth of working capital! It was riPected by Mr Wilson Who said in effect to Mr ccard o: "No more of that. You know we iCannot finance any more nationalisation; You lcilow we haven't got the people to manage or _run nationalisation. It is true we have a paper Lord to run the National Enterprise Board but even if he knew anything about motors he Would know enough not to want us to nationalise an American motor company to compete with the nationalised British Leyland. However, I will ask my financial expert to Work out a deal with you". If the workers treat is anti-nationalisation deal with contempt and sit in the factories they could bring Mr Ilson's government down. The forecast of lax, million unemployed by the end of 1976 is not Putting them in a good mood.

How, then, can I attempt to predict the stock Tarket's future if there is a chance of Mr wilson being forced to go to the country? I can give them economic prognostications as things stand without a political crisis. The National Institute of Economic and Social Research gave recently its gloomy forecast of a very modest upturn in 1976 with exports growing at about 4 per cent and consumer expenditure at V2 per cent, with public consumption and investment, both public and private, still falling slowly. James Morell, the economist advising the Charterhouse Group, is a little more optimistic. He expects recovery to begin in the middle of 1976 when exports should start rising at the rate of 6 per cent a year. The GNP should continue to fall in the first half and rise at the rate of 1.7 per cent in the second half of 1976.

For the stock markets the stimulating part of Morell's forecasts is his expectation of much better company results. Their financial position has already eased, thanks to Mr Healey's budget changes, and in spite of still .narrowing profit margins in coming months Morell estimates that company profits in 1976, before depreciation, but including income from abroad, should rise by 12 per cent over those of 1975. And little or no tax will be paid on them for various technical reasons. If these estimates prove to be not far off the mark I would guess that the FT index of industrial ordinary shares — now around 362 — could rise to 450 before the budget. If the market begins to anticipate some reflation in the budget by way of income tax cuts or reliefs — offset by cuts in government expenditure to avoid stoking up the inflation — then the index could top 450. But I am not too bullish.

Here I must say that I do not expect Mr Wilson to throw in his hand or be forced into an election. He has already become accustomed to eating the words of his Clause 4 socialist manifesto and a little more cynicism from him will be stomached by the already hardened and disillusioned members of his Cabinet. If there is an industrial sit-in or two he will not make a crisis of it and take over the stage; he will watch it from the wings. The important point for his survival — and indeed for the survival of the whole country — will be whether he can succeed in getting the TUC to endorse another twelve months pay restraint when the £6 a week runs out in August. Here Mr Jack Jones will surely come again to his rescue. The one thing Mr Jones lives for is to keep a Labour government in office — however much it will have been forced to eat the words of its socialist manifesto, however much it will have been forced to depart from the holy writ of Clause 4 socialism. Perhaps Mr Jones would not be sorry to see what is called the social-democrats take over from authoritarian Clause 4 socialists.

I assume, then, that there will be no violent industrial crisis. I am prepared to believe that the Wilson government will let the workers take over Chrysler or any other industrial trouble-spot and control the top supervisory boards of companies as they do in Germany (management on the two-tier sytem cannot be worse than the management we have got today on a one-tier) provided always that the £6 a week pay restraint will be followed by, say, a 5 per cent limit which will bring the inflation rate down to a digit. That is the key point of Mr Wilson's industrial strategy. When the market begins to realise this and to see events shaping in that direction it will begin to get very bullish indeed. And it will start with a boom in the gilt-edged market. But investors will be wise to avoid the shares of companies with bad industrial relations or those who object to two-tier supervisory boards. Sooner or later the workers are bound to have a share in management. today may be worth no more than the cheapest of paperbacks in 1978.

I will not, you will observe, recommending bulk purchase of ordinary household goods, clothes, drink and tobacco. I haven't the money for such a move and I don't want to martyr myself on the model of Margaret Thatcher.

3. Live in half your house.

Yes, you could save substantially by shutting.

off the heating and lighting in about fifty per cent of your domestic lebensraum. We are now living in the kitchen and one bedroom and are quite cosy. Of course, we had to pay for the TV set to be moved from the sitting-room and for the doors to all unused rooms to be carefully sealed, but we are definitely saving money.

I won't deny that we have problems. My wife tends to type while Lam watching war films and

thrillers and the rat-tat-tat of her machine can easily be confused with the chattering of automatic weapons, with the result that! easily lose the thread. Also, my wife worries about the effect of continued frost on the furniture, fabrics and bric-a-brac of the sitting and dining rooms. We have heard odd noises which could mean exploding glassware and contracting woodwork, but the windows to these rooms are so opaque with frost that it has so far been impossible to assess the damage.

I can't deny, too, that the kitchen becomes insufferably crowded when the children and grandchildren come to lunch. I don't like to see little Sam and his carry-cot on top of the fridge and the rest of the kids perched on the freezer. 5. Adulterate your drinks cabinet.

The hard stuff is terribly expensive these days and it is only commonsense to top up all bottles with water. I've had a bottle of Glen McFee for six months and I'll swear that visitors don't realise that what they are getting now bears only traces of scotch. They see the bottle, you keep them chatting, and the mind does the rest.

But, of course, you know, and you take your tipple from the bottle of rose, rouge, blanc, gin, vodka, rum or whatever that you know to be least adulterated. There comes a time, naturally, when you are serving pure water all round. Then, I'm afraid, you have to lash out on a new supply of booze.

If you've followed my advice as a supersaver you should be able to afford a visit to your wine merchant every six months or so. But never buy drink in bulk. That's the road to ruin.