Where Mr. Butler Stands Tuesday's debate may not have told
the House of Commons very much about the recent Commonwealth Economic Conference, which was supposed to be under review, but it told it some very useful things about the Chancellor of the Exchequer's attitude to Britain's economic situation. He put the need to curb inflation first, and there was no repetition of his earlier tendency to act as if deflation stood near the head of the -list of • possible economic dangers. The time for a major change in the strategy which Mr. Butler has followed ever since the. present Government took office has not come yet. Retrenchment at home to the full extent possible and the strengthening of the ' position of sterling abroad are still the watchwords. Vigilance and determination have, as the figures of the external balance and the value of sterling plainly show, paid solid dividends. The essential connection between infernal solvency and external competitive power is now so fully grasped that, incidentally, the Opposition, still haunted by the indiscretions of Mr. Dalton, found it virtually impossible to find any chink in the Chancellor's defences on Tuesday. But the problem of reducing the prices of exports in order to cope simultaneously with flagging demand and increasing competition from other countries shows no sign of becoming easier. Speaking at Leeds last week, Mr. Butler argued that there was now no pressure of demand at home which could deflect the efforts or ease the path of exporters struggling against more difficult selling-conditions abroad. That is true. But there is still no sign of a sufficient fall in labour costs and prices of home-produced materials—coal in particular —to allow the exporters to meet the sharper competition which will come from German and Japanese exporters from now on. In fact high prices at home are still having their effect on com- petitive power abroad. Even stationary prices at home can be a reflection of an inflationary situation. And if the other Commonwealth finance Ministers are now concentrating their attention on it, as Mr. Butler clearly is, well and good.
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