IN the serious economic crisis of August 1931, gold and foreign investments flooded out of Britain and there was a growing budget deficit. A national government was formed which included Ramsay Macdonald, a former Labour leader, as Prime Minister, Stanley Baldwin, the Conservative leader, as Lord President, and Herbert Samuel, the Liberal leader, as Home Secretary.

After taking Britain off the gold standard, the Chancellor of the Exchequer, Phillip Snowden (a former Blackburn MP) introduced a severe austerity budget, which raised income tax, increased the duty on alcohol, tobacco and petrol, cut the pay of some state employees (including cabinet ministers and MPs) and even cut unemployment benefit.This was done to restore financial equilibrium, repay loans from foreign bankers and restore confidence among foreign investors.

Now, in 2003, Britain is having to borrow a staggering 37 billion pounds in order to balance its budget, which will have to be repaid (at a high rate of interest) to the international money markets.

One wonders just how long it will be before we reach an economic and indeed political crisis like 1931.

JOHN PORTER, Thwaites Road, Oswaldtwistle.