FINANCE AND INVESTMENT
NOBODY in the City expected a good Budget and everybody is now agreed that the Chancellor of the Exchequer's solu- tion is not a bad one. It has been obvious that despite the Chancellor's break with precedent in February, when he announced his borrowing intentions, Defence costs were mounting at such a rate as to make higher taxation unavoid- able. The City's chief fears were a rise in the standard rate of income tax, which would have been regarded as a damper on trade, and a tightening of the N.D.C. screw, which would undoubtedly have hit the stock-market. Now that both fears have been dispelled the Stock Exchange is grateful and relieved. Nor is there any denying that, except for a handful of punsts, the City approves the general frame- work of borrowing and revenue in which the Budget is drawn up. An extra Eso,000,000 on Defence has had to be provided for over and above the huge Iota' of £580,000,000 disclosed in the White Paper of February, and who will quarrel with the Chancellor's decision that £20,000,000 should be found out of additional taxation ?
The methods of finding the additional revenue are not, of course, in any sense novel, and in my view they apportion the burden pretty equitably. The surtax and Death Duty increases hit the relatively well-off, the motor tax affects a wide cross-section of the population, and the tobacco and sugar proposals are broad taxes on consumption, which in their total effect bear most heavily on the poorer classes. Thus, I think it is fair to say that the Chancellor has made the best of a difficult job. He has certainly done nothing which should hinder any revival of trade which may be possible in face of political tension, and so far as I can see he has not departed so far from the path of financial rectitude (new style) as to threaten the stability of currency and credit.
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