XN000022-1977-08-12 — Page 7

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FRIDAY, AUGUST 12, 1977

POSITIVE SIGNS OF ECONOMIC RECOVERY IN BRITAIN

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THE BRITISH ECONOMY IS AT LAST SHOWING POSITIVE SIGNS OF RECOVERY AND HER BALANCE OF PAYMENTS CONSTRAINT IS VIRTUALLY ELIMINATED, THE LORD MAYOR OF LONDON, COMMANDER SIR ROBIN GILLETT TOLD MEMBERS OF THE HONG KONG GENERAL CHAMBER OF COMMERCE DURING LUNCH AT THE HILTON HOTEL TODAY.

SIR ROBIN SAID THIS WAS DUE TO THE CONTRIBUTION OF NORTH SEA OIL AND TO INCREASED EXPORTS WITH A SUSTAINED SURPLUS IN SIGHT FOR THE END OF THE YEAR.

CURRENCY RESERVES HAVE RISEN DRAMATICALLY BY 45 PER CENT SO FAR THIS YEAR OVER 1976 LEVELS, MANUFACTURING INVESTMENT HAS BEEN ON INCREASE FOR A YEAR AND CBI (CONFEDERATION OF BRITISH INDUSTRY) INDUSTRIAL TRENDS SURVEYS POINT TO 20 PER CENT RISE IN 1978 OVER 1977, HE POINTED OUT.

HE NOTED, HOWEVER, THAT WHETHER BRITAIN COULD SUCCEED IN GETTING INFLATION DOWN TO THE LEVEL OF HER CHIEF COMPETITORS NEXT YEAR WOULD DEPEND ON THE LEVEL OF FUTURE PAY SETTLEMENTS.

HE THOUGHT A RETURN TO FREE COLLECTIVE BARGAINING WOULD NOT RESULT IN RUNAWAY WAGE SETTLEMENTS THAT MIGHT BE EXPECTED. THERE WOULD BE DEMANDS PERHAPS, HE SAID, BUT NOT SETTLEMENTS FOR TWO REASONS.

FIRST THE INABILITY OF FIRMS TO PAY AND THE THREAT OF FURTHER UNEMPLOYMENT IF CLAIMS WERE PRESSED, AND SECONDLY THE LESSON LEARNT FROM THE LAST WAVE OF INFLATION THAT INCREASES PAID IN CONFETTI MONEY ARE USELESS TO THE RECIPIENTS, HE SAID.

INVISIBLE EARNINGS TOO HAD MAINTAINED RECORD LEVELS AND WERE SET TO IMPROVE FURTHER THROUGH NEXT YEAR, SIR ROBIN SAID.

HE DISCLOSED THAT THESE EARNINGS, WHICH WERE THE PARTICULAR CONCERN OF THE CITY OF LONDON, CONTRIBUTED TO ONE THIRD OF THE UNITED KINGDOM'S TOTAL FOREIGN EARNINGS AND WERE EQUAL TO NEARLY ONE HALF OF THE COUNTRY'S IMPORT BILL.

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