With an Eye on Tomorrow

With a general election probably coming next year, most Britons expected Chancellor of the Exchequer Reginald Maudling to produce a bonanza budget designed to spur the lagging economy and win back the voters who have drifted away from the Tories in recent months. But hard-headed Maudling. 46, was determined not to risk a burst of inflation that might bring back the old familiar balance-of-payments problem and weaken the value of the pound sterling abroad. Between stagnation and never having it so good he chose a middle road.

It was indeed Britain's first deficit budget since 1947, but instead of glittering, across-the-board tax cuts that Britons had expected, Maudling trimmed income taxes by a moderate $700 million, targeted his cut to benefit the lowest income families--an aim that could only draw praise from the opposition. To help offset the cost, he announced his intention of taxing the vast, largely untapped fortunes ($2.3 billion in 1962) that Britons lavish on gambling each year.

To expand the economy, Maudling aimed for a minimum annual growth rate of 4%, conceding labor's right to demand a 3.5% wage boost if this is achieved. Though he disappointed many industrialists by not introducing European-style incentives for exporters, Maudling installed a set of ingenious tax concessions designed to modernize productive equipment and lure new industry into the areas of heavy unemployment. Added to sizable previous concessions to industry that he had already granted since taking over as Chancellor last July, Maudling hoped that his new budget incentives would put the economy in fighting trim by next April--which is about the time when Britain is likely to go to the polls to choose its next government.

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