§ During the past year we have kept to the narrow and difficult path between inflation with an unbalanced external position on the one hand and deflation with its consequent unemployment on the other. We have been able to avoid the pitfalls on either side of this narrow path. In this we have been assisted greatly by the external aid we have received from the United States and Canada, but, nevertheless, we could not have achieved the results which we have unless we had been prepared ourselves to carry out the not always very popular policies that we have pursued.
§ In considering the position in which we find ourselves at the beginning of 1950. I would point out that there has been little change in the unemployment figures, except the usual seasonal variations. The course of retail prices has been comparatively steady, the increase in the index from 109 to 113 being mainly due to the limitation of subsidies at the time of the last Budget and to the increase of the price of bread upon devaluation. Neither of these can, of course, be regarded as any evidence of inflationary pressure.
§ The wage rate index has remained remarkably steady, increasing only one point between January and December, whereas the index of earnings has just about kept pace with the cost of living index. Between 1948 and 1949, the amounts paid to wage and salary earners went up by over £300 million, which is a measure of their share of increased production. I should like to emphasise in this respect the great difference there is between increases in wage levels whereby more is paid for the same service, and increases in earnings arising from more being paid for more produced. This latter form of increase in personal incomes we have always encouraged because it is the by-product of greater productivity. [HON. MEMBERS: "Oh! '2] Anyone who doubts that has only got to read the original White Paper to see that it is so.
§ There has been a falling away in the number of unfilled vacancies which indicates a lower pressure of demand for labour. The figures of labour turnover show a very considerable mobility of 53 labour, although it is, of course, held down to some extent by the shortage of housing. This does not support those who say that much less full employment is necessary in order to enable industry to adapt itself to the changing requirements of the markets. [HoN. MEMBERS: "Who says so? "]
§ Throughout the year, there was a continual improvement in the quantity and variety of goods available in the shops, and the figures of personal expenditure, which show substantial increases in the amount spent on food and clothing, accompanied by reductions in expenditure on alcoholic beverages, tobacco and entertainments, prove that the pattern of consumption is approaching more closely to that of the pre-war period.