The Vicious Spiral
" There will be some further price increases," said Sir Hartley Shawcross last Saturday—and then, stepping straight from firm ground into a quicksand, " Not very great., I think." It had better be pointed out without delay that what the President of the Board of Trade thinks is not, in this case, evidence. In the latest Bulletin of the London and Cambridge Economic Service it is estimated that prices in 1951 will be about 10 per cent. above the 1950 level. Since more than half of that increase had already taken place by the end of April. the forecast is con- sistent with a certain levelling-off in the rest of the year. Perhaps Sir Hartley was not looking further than 1951. But if that was the case he should have said so. For all the signs are that the check to prices, even if there is one, will be temporary. The last big general rise in-wages only took place last year, and added £186 million to the national wage bill, but already a new rise is being sought by a formidable number of unions. Since rearmament demands will not leave anything to spare for increased supplies of consumer goods, prices are practically cer- tain to go up again later in the year. In fact what used to be called the vicious spiral has not lost any of its old vice. even though the Government are deliberately relying on a limited rise in prices to mop up new purchasing power. It is-still capable of upsetting the best laid plans of men and Ministers. The trade unions in refusing to return to the policy of restraint and in nego- tiating for a relaxation of Order No. 1305, which prohibits strikes. are in effect giving themselves a freer hand to seek wage increases. By the time they get them retail prices, even as measured by the sluggish official index, will probably have given them an excuse to ask for more. And they are hardly likely to refrain from asking because the President of the Board of Trade thinks the rise will be small.
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