More Pressure on the Pound

In the midst of one of Britain's cruelest winters, the Board of Trade last week issued some sorry news: the foreign trade gap worsened in January. The report was doubly disappointing because Britain had expected to improve upon the strong performance that it recorded in December, when exports hit an all-time monthly peak and the trade gap narrowed to $224 million. But January's exports plunged and imports were scarcely reduced by the Labor government's 15% surcharge on most foreign purchases. The gap grew to $272 million.

Coming just when France's thrusts had made money markets nervous, the poor figures sent the pound into a tumble. It dropped 3/16 of 1-c- to $2.79 11/32, the lowest this month, and the Bank of England had to defend it by buying sterling on the open market. The situation was complicated by the Labor government's declaration that it will establish a board with the power to review and make recommendations on almost all prices, wages and labor agreements.

Britain faces several other imminent problems. Next week it will meet with its European Free Trade Association partners at EFTA's conference of ministers in Geneva; the partners have been complaining loudly against the 15% surcharge, may issue an ultimatum that Britain either drop it or get out of EFTA. Though British financial leaders had been hoping for a 5% trim in the surcharge this month, they are now talking about a 2 1/2% reduction to take effect in April.

In May Britain will have to begin paying off the $3 billion emergency credit that it raised last November from the U.S. and other major countries to save the pound then. The credit was due to expire this month, but Britain, having already used up about $1 billion of it, last week won an extension. To meet its obligation to repay, London is negotiating with the International Monetary Fund for a long-term loan.

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