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Trade deficits, unbalanced budgets and the threat of inflation are also worrying Europe's smaller nations. Sweden is trying to nip inflation with special taxes, but such measures are not enough. With a 10% gain in wages last year, Swedish workers jammed retail stores and created a huge new demand for imported products. As a result, Sweden ran a $50 million trade deficit last year, twice as much as in 1954. Denmark, on the other hand, held its imports down and boosted exports $70 million last year, thereby cut its $200 million trade gap to $135 million. Yet Denmark is still having trouble. Only a fortnight ago, for example, the retail price index jumped five points to 408.
Germany has built up a dollar reserve of $1.3 billion, balanced its budget, and expects to bank a $600 million surplus this year. But its good showing was possible chiefly because of vast grants of U.S. aid, and because Germany spent relatively little for rearmament (see FOREIGN NEWS). In an effort to liberalize foreign trade, Belgium lifted virtually all exchange restrictions on the franc and established a free gold market. But Belgium is having trouble staying within its income, has run up a $6.2 billion national debt. Gradually, however, Belgium is getting the problem in hand, expects its deficit this year to be $240 million v. $380 million last year.
The one shining exception to Europe's spendthrift ways is The Netherlands. While the thrifty Dutch enjoy their boom, they are keeping it well in check. Real wages moved up 20% over the last two years. As national production climbed (up 12% last year to $7 billion), Holland cut taxes twice to step up capital investments and increase production. Not only has Holland dropped import controls on more than 92% of its foreign trade, it has built up a dollar reserve of $1.3 billion. Despite the heavy burden of war indemnities and flood damage, Holland in six years chopped its national debt 25% to $5.3 billion. Said one Dutch official proudly: "Our house is in order."