It was widely rumoured that the Budget of 11 March would be as severe as those associated with Stafford Cripps in the early days of postwar austerity. It had also been suggested, following the communique from the Commonwealth Conference in January, that the Budget might provide for a further devaluation of the pound or even the adoption of a floating rate. However, in the wake of the Cabinet decision not to proceed with the Robot plan, the most pressing issue facing Butler was how deflationary should the Budget be to tackle the short-term dollar drain? Since radical action in the external field had now been sidelined, two issues in the domestic field dominated Budget committee meetings: how high should the Bank Rate be pushed and should cuts in food subsidies be accompanied by a new tax on coal? After consultation with Niemeyer and Bolton, Cobbold advised Butler to go for a Bank Rate of 4 per cent on the grounds that the exchange situation was so parlous that the government could not neglect any action that might remedy it.
KeywordsMonetary Authority Robot Walk Bank Rate Food Subsidy Competitive Power
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