from Finanoinl Times Oct 11
ritish economy has boon given a "breathing space in wiich to make vital decisions," Sir Roy Harrod told the Economic Research Council...He described the prosent phase of the economy as one of "lull, pending rather strong developments." Expansion of the economy was bound to cause an increase in imports, which would trouble the balance of payments position, "The crunch is still to come," Sir Roy aided. Moreover, “estern Durope had not aa yet felt the effect of Frosident Kennedy's measures to stom the capital outflow from the U.5.. -ilthough these measures should do little harm to the continental countries, which has acq= uired good reserves, “Britain tonds to be on the razor edge."
President Kennedy's moasures were unlikely to bring the U.5, balance of payments to right in the nar future, "So long as the dollar is weak, the now very powerful central bankers of the important countrios will take oll steps to prevent a sterling crisis occurring, But not so afterwards," Nothing drastic noed be done to defend sterling in tha immediate future, ho stressed. ut the Government, whether Conservative or Labour, would face tho choice of adhering to tho National Economic Development Council's growth policy or of yet again demping down production at home with the plea that the "defence of sterling" made such action necessary.
The balance of payments position .was at presont fairly satisfactory, Sir Roy remarked, because of the damped state of the economy, and because of a big inflow of capital, in part "a mirror image of the outflow of capital that has been giving so much trouble to the 0.5."