Blitzed Boom

Since World War II the new city that rose from the rubble of blitzed Coventry has epitomized British economic recovery. Coventry's citizens last year made higher wages, owned more autos and TV sets, built more houses than those of any comparable city in Britain. But Coventry's boom is being blitzed by the government's deflation program (TIME, Feb. 27). The auto industry, which employs 60% of the midland city's 172,000 workers, last week was shutting down assembly lines and was cut back to a four-day week, while unsold cars spilled over onto abandoned airstrips and playing fields. And there was worse to come. Britain's No. 1 automaker, British Motor Corp. (Morris, Austin, M.G., Riley and Wolseley) last week announced a 7.5% price increase. Though Britons rushed to buy new cars before the price boost went into effect, the industry still had 70,000 unsold autos at week's end and will find it even harder to sell its output from now on.

The government's tightening of consumer credit, including a hike in the minimum down payment on new cars (to 50% of the purchase price), hit the industry where it hurt most--in the domestic market. In the immediate postwar drive for exports, Britain sent a flood of cars abroad. But when the government stopped allocating raw materials on the basis of exports in 1952, British automakers shifted to the easier home mar ket. In 1951 Britain turned out 475,919 cars, exported 366,622, but in 1955, when production had nearly doubled to 897,560, exports increased by only 24,183, or barely 6%. Moreover, only one in nine export cars is now earning sorely needed dollars from the U.S., v. one in every three in 1950.

Britain has been hardest hit by Germany, which has already overhauled Britain in the U.S. (where 29,000 Volkswagens were sold in 1955), is fast pulling ahead in European markets as well. Last week, as British Motor Corp. raised prices, Volkswagen, which cut prices seven months ago, hinted that it will soon reduce them again in a bid for bigger sales.

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