from Stock Exchange Gazette The following editorial which appeared in the April 8th issue of the Stock Exchange Gazette is an interesting indication of the attitude of investors towards the Labour Government :, ay "There was no dismay in the City over the election result and the stock market ‘ withstood it without a quiver. There was no dismay over the £27m, downturn in the gold and dollar reserves, probably the only honest figures we have seen in the last 18 months, The City, in short, is by no means despondent about the future of Britain and neither should be investors, To use a phrase much bandied about by Mr. Wilson during the election campaign the City's view is "that options are wide opene" There is stability and an absence of "electionitis" for the first time for several years, and if by that over-used word "pragmatism" is meant Mr, Wilson's ability to face up to reality, and to reject dogma if dogma does not work, the prospects of a solution being found to. our economic problems are a good deal brighter this week than they were before polling day. Beit, "At this stage everybody knows that profits are going down and that most dividends in the next 18 months will at best be maintained, But the investment world is . astonishingly calm in the face of this prospect, possibly because it is becoming very sophisticated, The majority of buying powers on the stock exchange is now ‘in the hands of executives as distinct from the owners of companies, and execut~ ives can usually take a much calmer view of the future than individuals whose: personal fortunes are at stakee ...l0 a large extent Mr, Wilson and his Govern=ment have regained the respect of the City by showing their ability to learn new tricks fairly quickly, even if this has meant casting away the shadows of Keir Hardie. The City is now so hardened to the idea that the Budget will be really tough that we expect there will be some sighs of relief around 5,30 ‘p.m, on May 2 when Mr, Callaghan sits dom, There,is, for instance, talk of a 42$%.corpora~ tion tax, although Mr, Callaghan put 40% as the maximum figure and many hopeful company boards have calculated their own accounts on the optimistic basis of 35% tax, The difference between the two latter rates. amount to £150m, additional taxation on company profits and this will probably enable Mr, Callaghan, Mr. Brown and Mr, Wilson to turn around and explain to the unions why something has to be done over demarcation disputes, lightning strikes and wage claims, "The way the "pragmatic" mind of Mr. Wilson is working will show first in the Queen's Speech, which will presumably reveal the priority to be given to the re-nationalisation of steel and the basis of compensation,..Many observers
. consider that Mr, Wilson will continue to find priorities ahead of this embarras— / sing affair, which has ceased to have political substance except on the back benches,.s.eIt is not without significance that steel shares have fallen since election day and this is not entirely due to the realisation that compensation terms need not necessarily be those which were laid down initially in the White Paper. The new idea is that if steel re-nationalisation comes about at all it will be on a different basis, under which a super Iron and Steel Board would be in charge as an alternative to the Government directly buying the equity capital. "Will Mr, Callaghan dare to introduce a per capita tax on employees in order to relieve the obvious "storage" of Labour by so many companies? He could well do this unless he feels that deflationary forces are already at work on a scale sufficient to make companies cancel or slow down expansion projects...If,...the Budget shows that the new Government has the courage and determination really to get to grips with Britain's long-standing economic problems, the long-term outlook will be vastly improved and share prices could reflect this, Investors Should be cautious but by no means daunted by that Labour majority of 97,"