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Chapter I. The Home Economy

Published online by Cambridge University Press:  26 March 2020

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Total real output stagnated completely in 1977. Private and public consumption and gross fixed investment all fell, but this was slightly more than offset by relatively buoyant exports and by some restocking. Despite the very small increase in total final demand, the volume of imports rose by about 4 1/2 per cent, leaving gross domestic product virtually unchanged from its 1976 level. Unemployment rose, albeit erratically, by under 100 thousand during the year, and stood at just under 1.4 million in January of this year (Great Britain, excluding school leavers, seasonally adjusted). The rate of consumer price inflation began to fall in the second half of 1977; the consumer price index is estimated to have been just under 13 per cent higher than a year earlier in the last quarter. The balance of payments on current account moved into surplus in the second half of the year, but revisions to the official estimates of invisible trade mean that the surplus for the year as a whole is now estimated to have been only about £100 million.

Type
Articles
Information
National Institute Economic Review , Volume 83 , February 1978 , pp. 7 - 23
Copyright
Copyright © 1978 National Institute of Economic and Social Research

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References

Notes

note (1) in page 17 Based on 1970 prices. Revaluation of the national accounts to 1975 prices this year is likely to increase these measured growth rates by about 1/2 per cent each, primarily because of the greater weight which oil production will carry on the new base. See further the Appendix to this chapter.

note (1) in page 19 This paper will be included in the proceedings of the conference, edited by M. V. Posner and to be published shortly by Heinemann Educational Books.

note (1) in page 22 This Appendix was prepared by A. J. H. Dean.

note (2) in page 22 See Chapter II and the article by S. A. B. Page in the National Institute Economic Review, no. 82, November 1977.

note (3) in page 22 These are factor-cost prices, appropriate to the measure ment of output-based GDP. They thus value oil at the cost to the producers (including their profits) of extracting the oil. This price basis is about half of the price of oil valued at market prices, which includes consumer taxes (hydrocarbon duties and VAT where applicable). There are arguments for also excluding royalties from the price of oil used here, but since this would only reduce that price by one ninth the effect on the results would be minimal.

note (1) in page 23 Conceptually, we require net output figures: we assumed that for the oil industry, gross and net outputs are identical (i.e. oil is produced by digging a hole in the ground) and obtained non-oil net output by subtraction from GDP