My judgment is, therefore, that we shall continue to maintain a very reasonable balance in the economy. But I think also that we should not commit ourselves too far in advance. The economy should be well able to respond to any increases in demand, in particular of overseas demand, which may occur. Thus, there is no cause for making this Budget especially tough or more disinflationary. We need not impose harsh new taxes, since an increase in the level of taxation on initiative and enterprise would hold down and impede, rather than stimulate and spur on, our drive for productivity and exports.
On the other hand, as my analysis has shown, production is likely to be higher this year than last, and I judge that it would be unwise at present to stimulate purchasing power by remissions of taxation designed to increase personal consumption. Although each of us may have personal reasons for regretting this conclusion, a sober appreciation of our economy must conclude that it would be premature to adopt policies which might prejudice our future liberty of action. This is the more true while we are necessarily uncertain about developments in the United States of America and about our own ability to take the full measure of our competitors in external trade.
Moreover, the man in the street knows well that the real value of a Budget lies in its contribution to those things which are really important to him—full employment, stable prices, a steady growth of production. By all these tests, last year's Budget was successful. It must be the task of this Budget of 1954 to carry on this good work, and as far as I can tell, at this moment in time neither tax increases nor major tax remissions are possible or called for.
While, this year, we should avoid a deficit on our final out-turn, we need not strain after any significant surplus. My judgment, therefore, is that this Budgetary policy will secure a continuance of the achievement which characterised the last financial year—a healthy balance in the economy as a whole. I shall make no changes for change's sake. So for the second year in succession I shall raise no new taxes. Such remissions or adjustments as I am now going to describe are necessarily concentrated on granting certain special claims to relief and on increasing the incentive to productive investment.