BUSINESS ABROAD: Buoyant Britain

“Never since Queen Victoria came to the throne more than a century ago,” whooped London’s Sunday Express, “has Britain been so buoyant, so prosperous.” Britain’s export boom broke new records in May, and came within a hairbreadth of bringing the long-coveted balance of trade. Last week the government announced that May exports reached an all-time peak of $866,300,000, leaving a trade gap of only $4,200,000, the lowest recorded since the government began keeping figures in the mid-19th century.

Excellent Show. The gap was so small (compared with $110 million in April) that it could actually be written off as the .difference in accounting methods used for imports and exports. Considering Britain’s invisible exports in the shape of earnings from shipping, banking and insurance overseas, British economists feel that their balance of payments actually shows a surplus. Said jubilant Sir David Eccles, president of the British Board of Trade: “An excellent show. This is due to the vigorous search for markets abroad which our businessmen made when home trade was not so good. Now they will be able to sell more at home and abroad.”

Britain sent 10½% of all its exports to the U.S. in the first five months of this year, 37% above last year. The biggest British export to the U.S. is autos, which account for 25%. Other exports range from tractors (doubled in the first quarter) through textile machinery (nearly doubled) to plastics (trebled). The U.S. is now Britain’s biggest market for sewing machines.

Solid Ahead. Behind Britain’s trade comeback is a brisk overhaul of its economy. After the September 1957 run on the pound in favor of the German mark, which Britons considered one of the darkest periods since the war, the government decided that more austerity was needed to restore the pound’s prestige. It cut down government spending, raised the bank rate to 7%, got banks to put a voluntary “freeze” on bank loans. Britain was also helped by the worldwide drop in prices of raw materials. Its austerity program worked, and by mid-1958 Britain again had more than $3 billion in gold and exchange in the till—and new self-confidence. It freed the economy from a tangle of regulations, lowered income and corporate taxes, made sterling convertible, and announced the end of import restrictions against most goods coming from the dollar area.

British economists doubt that exports will continue to rise at their current rate, fear that the trade balance may turn around again when raw material prices rise and import demand in Britain picks up as a result of economic expansion. But Britain is clearly out of its balance-of-trade crisis, and the outlook ahead—in the best British tradition—is solid without being spectacular.