THE RETURN OF THE GNOMES OF ZURICH

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Here are some extracts from a fascinating Panorama made in 1968 - about how there are massive spending cuts on the way and asking where they will happen. It is called Where Will the Axe Fall?

The Labour government was in the midst of a terrible economic crisis. Harold Wilson had devalued the pound and announced that Labour was about to bring in big cuts to all its public spending. They had to reduce the deficit he said, otherwise there would be disaster.

There was a frenzied reaction. Bankers, economists, and much of the press agreed that the cuts were inevitable. Many Labour MPs said it would destroy the very fundamentals of the party.

Panorama debated the issue.

And it is just like today. As if time has stood still.

There is a great argument between a Labour MP Christopher Mayhew who wants to pull all British troops out of the Middle East. He says that "western military deployment in the Persian Gulf is a dangerous anachronism". Against him is one of the great supporters of the British Empire - the Conservative MP Julian Amery - who insists it was British troops who prevented the Iraqi dictator from invading Kuwait in 1961 and cutting off the oil. (The dictator was General Qasim)

Christopher Mayhew was also the first MP to take mescaline publicly. Back in 1955 he had allowed Panorama to film him taking the drug - and then record everything he said and did during his trip. The film was never shown, but the rushes exist. There is a restriction on them but I am going to try and get it lifted and put the film up.

Then there is a battle between two Labour MPs. One is a left-winger, Stan Orme, who insists that there is nothing wrong with Britain - the cuts are just there to please the international bankers who have caused the crisis by speculating on the pound. He calls them the Gnomes of Zurich.

His opponent is the right-wing Labour MP Woodrow Wyatt who says Britain has been on a borrowing binge and has to wake up. As you watch him remember that in the 1970s he would switch sides and become one of Mrs Thatcher's most fervent supporters.

What then happened was that the British economy began to grow again. And by 1969 there was a balance of payments surplus. Although Labour did pull out "East of Suez" many of the really draconian spending cuts that people feared never happened.

But then Labour lost to the Conservatives in the 1970 general election. And within 18 months there was another and this time catastrophic economic crisis which by the mid-70s destroyed all faith in the old politics in Britain.

Sometimes history repeats itself. And sometimes it doesn't

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