During the first half of 1961, real output and expenditure were rising at a rate of about 3–4 per cent per annum and in the absence of the Chancellor's restrictive measures in July, much the same rate of expansion would have been likely to continue through the rest of the year. It now seems that the growth of demand and output will slow down and probably level out for a time. The balance of payments continues in overall deficit, but was improving considerably before the Chancellor's measures were announced. The reason was a decline in imports, which has been sharper than we expected in earlier issues of the Review. The rate of exports has barely changed since the end of 1960. In the next twelve months conditions in export markets should be favourable and even though Britain's competitive position remains weak, there should be a rise in exports. Since a check to growth at home is likely to prevent imports from rising much, the overall balance may again show a surplus in the first half of 1962, for the first time since 1958.