As usual on the weekend before Budget Day in Britain, the Chancellor of the Exchequer, Mr.
As usual on the weekend before Budget Day in Britain, the Chancellor of the Exchequer, Mr. Denis Healey, invited newsmen and photographers to his home in Sussex for pre-Budget reports and photographs on Saturday (13 April). He and his wife, Edna, posed in the garden, on the lawn and at the fishpond, smiling and cracking jokes with the newsmen.
But economic experts did not see Mr. Healey's smile as reflecting the character of the Budget proposals he will present to the House of Commons next Tuesday (15 April). They expect that his proposals will attempt the difficult task of severely reducing consumption without aggravating the country's current business recession or increasing the rise in unemployment.
Mr. Healey and his official advisors evidently believe that the world slump will continue to get worse during the rest of this year, but that the international situation will improve next year. The Budget will therefore have to keep the british economy keyed up for when the demand for exports increases around the middle of 1976.
It will be his fourth Budget in just over a year, and as before he will have little room for manoeuvre on his most urgent problem - the country's continually rising wage bill. A wage "freeze" or compulsory restraints are not politically feasible, and contrary to the Labour Government's declared policy. The Prime Minister, Mr. Harold Wilson, has emphasised several times that the Government will rely on its "Social Contract" with all sectors of britain's industrial society to hold back wags, and there is not intention of imposing a "freeze".
Some economists expect Mr. Healey to give more help in the form of tax reliefs to companies struggling to pull through the recession - possibly amounting to a total of ???500 million sterling. To make up for this there may well be increases in indirect taxation, and one frequent suggestion is for varied rates of Value Added Tax (VAT), with luxury goods carrying the heaviest burden.
Smokers and drinkers will also have to steel themselves for probable large rises in excise duties which will increase the cost of alcohol and tobacco. Further cuts on public spending are also on the cards.
During the weekend, motorists all over the country rushed to stock up with petrol, fearing hat the cost would increase sharply if Mr. Healey decides to raise the tax on fuel oils.
SYNOPSIS: Though Mr. Healey was all smiles on Saturday, the public are expecting the worst on Tuesday. His budget proposals are likely to try to reduce consumption without aggravation the country's current business recession, or increasing the rise in unemployment. The measures will try to curb inflation, while keeping the British economy keyed up for when the demand for exports increases around the middle of nineteen seventy six.
Economic experts think it likely that he will increase indirect taxation, possibly by introducing varied rates of Value Added Tax with the greatest burden being carried by luxury goods. Such measures would help pay for the tax reliefs he is expected to hand out to companies struggling to survive the recession. Alcohol and tobacco are always regarded as luxuries, so smokers and drinkers can expect a large increase in prices.
Judging from other statements Mr. Healey has made since becoming Chancellor, the better-off can expect to be hit hardest. The Government would see it as part of their "Social Contract" which they hope will hold down the rapidly increasing rise of wage settlements. A wage freeze or compulsory restraints on incomes have been ruled out as not politically feasible.