Shots in the Arm
the reduction in Bank rate from 4+ per cent. Ito 4 per cent. is not the last step for some time in the Government's policy of financial easement, then there is a danger that the authorities are once again misjudging the state of the economy. Up to this moment there has been little hard evidence to suggest that the economy is running down, though that is certainly the impression created by ill-founded comment in many news- papers. But the latest figures still show that incomes, investment and savings are running at record levels and—disregarding the competitive failure of cotton textiles—so are industrial profits. These are not the portents of recession.
Why, then, have government spokesmen been so reluctant to stress these facts? It is true that the number of men and women out of work while changing jobs has grown considerably. But the number of people out of work for more than THE CITY OF LONDON—see page 757 ushtalsebnaeltIneetdnil two months has not. Moreover, since the sun the economy has received a succession of shots in the arm. The banks and the hire-purchase e companies have been freed to go about their business as they choose. Borrowing made easier for the nationalised indtr e local authorities—and for the Commons governments, too. The full effect of these step, cannot yet be measured, though it is already clear that bank lending is going, up rapidly. As long 0 the cut in Bank rate is regarded merely as 8 technical adjustment no harm will be done, but unfortunately it has already been interpreted as evidence that the Government is worried that it ought to do yet more to stimulate activity. yet in the few days since the Bank rate came dove, there have been reports that sales in the 5hoPs have broken new records, that the amount d hire-purchase debt outstanding is greater than ever before, and, significantly, that the cost d living index has edged up yet another point. MY more shots in the arm and the economy will hay`® another fit of inflation.
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