Britain's budget gets a boost from US
External circumstances, which can wreck the best-laid plans of finance ministers, have not dealt kindly lately with Britain's embattled chancellor of the Exchequer, Nigel Lawson. North Sea oil prices have fallen. The pound has plummeted against the dollar. And the dollar remains stubbornly high.
All these developments, which Mr. Lawson feels are beyond his own control, have upset his calculations for reforming Britain's economy through big tax cuts and pruning of government expenditures.
But like a rainbow after a heavy storm, Lawson suddenly found things looking a lot rosier yesterday. And the timing could not have been more propitious. March 19 was Budget Day in Britain.
On March 18, the day before the chancellor carried to the House of Commons the traditionally battered case in which all the chancellor's secrets are kept, a wave of good economic news came rolling in to provide Lawson with a much needed boost.
From Ohio came word that the temporary closure of 71 savings and loan institutions dampened the dollar's popularity. The pound rose by 2.3 cents to reach its highest level this year. The pound closed March 18 at $1.1067 in London, and $1.1195 in New York. The pound had risen to $1.1395 when the chancellor began his speech.
And there was news of a cut in government borrowing and of record North Sea oil output. The spate of good news was enough to make some fiscal experts muse whether an ``inevitable'' across-the-board rise in mortgage rates next month might be averted.
But the average Briton approached Budget Day with feelings of dread. Everyone wants to know what will go up.
The chancellor did nothing to disappoint the pessimists. As a result of the budget Britons will pay more than 2 a gallon for petrol (up 3.5 pence to 2.03 a gallon). Car tax will go up 10 a year to 100. Cigarettes go up 6 pence on a packet of 20, while duty will also rise on all liquor from 1 pence a pint on beer to 10 pence on whiskey. The Treasury will collect 845 million, but that does little more than keep pace with inflation.
Lawson had two overriding themes. The first, intended to keep international currency markets stable, was to emphasize his government's unswerving commitment to keep down inflation, now running somewhere between 4.5 and 5 percent. The second was a spending-for-jobs theme -- because critics in the Labour Party, the trade union movement, and even among more moderate Conservatives known as ``wets'' have felt the government has not paid enough attention to unemployment.
The measures Lawson proposed, such as expanding youth training schemes and the community program (designed to provide temporary work for the older, long-term unemployed) were generally well received. But union leaders like Norman Willis, general secretary of the Trades Union Congress, were aghast that Lawson acted -- in their view -- as though he had no comprehension that millions were out of work. They want to see much more than temporary relief.
The unions doubt that anything Lawson proposes will have the slightest effect on reducing the ever-increasing unemployment line. But the City, as the financial quarter in London is known, welcomed Lawson's budget as a tough one that could swell the work force by making greater concessions to the self-employed and reducing the amount employers and employees pay to National Insurance contributions.
The verdict now is that if Lawson is going to be the sweeping tax reformer people thought he would be, he'll have to wait until Budget Day rolls around next year when the recently collapsed miners' strike which cost the country 2.75 billion has receded into the background.