⁽¹⁾ See National Institute Economic Review no. 47, February 1969, pages 4-26 for an account of expectations and out-turn in 1968.

⁽²⁾ See Statistical Appendix table 20. Between 1968 and 1969 the United Kingdom share in ‘world’ exports of manu factures fell only from 11.1 per cent to an estimated 10.9 per cent. This annual comparison does, however, conceal the fact that after adjustment for strikes and recording errors it probably resumed some decline during the course of 1969 after reaching a plateau in the previous year. (See the additional figures shown in table 4, page 10.)

⁽³⁾ Nor would the retrospective vindication of the policy- makers' judgment seem as clear had unemployment responded in the ‘normal’ way to the substantial gap which opened up between the growth rate of productive potential (usually assumed to be about 3 per cent) and the actual growth rate of output during the year. (Between the fourth quarter of 1968 and the fourth quarter of 1969, output growth was probably no more than 1 1/2 per cent.) Some comments on the behaviour of unemployment are included below, on pages 34-36.

⁽⁴⁾ These were quite considerable in themselves. The measures taken then included the full use of the regulator, a tightening of hire purchase terms and a renewed restriction of bank advances.

⁽¹⁾ House of Commons Debates, 14 April 1969, col. 1003.

⁽²⁾ Ibid.

⁽¹⁾ There was a very small DCE of £16 million in the first half of the financial year, a period when seasonal influences would normally be operating somewhat in an expansive direction. The growth in money supply in the third quarter of the financial year (last quarter of calendar 1969) was probably fairly restrained to judge from Clearing Bank figures, and there was again a large balance of payments surplus, so that DCE should again have fallen well within the implied limit for that quarter.

⁽²⁾ See Board of Trade Journal, 10 September 1969, and the National Institute Economic Review no. 50, November 1969, pages 22-23.

⁽³⁾ The situation was complicated by the fact that exporters had responded to the announcement of recording errors by speeding up their filing of returns and submitting documents relating to past periods.

⁽¹⁾ This possibility was mentioned in the House of Commons, but there was no Government commitment. (See House of Commons Debates, 17 November, cols. 876-877.)

⁽¹⁾ A particular problem in the present instance is that the 1969 Treasury forecast was based on series in 1958 prices whereas the out-turn figures (like the NIESR forecast of May, 1969 which is also shown in table 3) are in 1963 prices. The reading of the past is rather different according to which of the series is used. (In this sense the NIESR May 1969 forecast may be taken as having been based on more accurate data.)

⁽¹⁾ See National Institute Economic Review no. 48, May 1969, page 18.

⁽²⁾ A comparison of the stockbuilding forecasts was given in the National Institute Economic Review no. 48, May 1969, table 7, page 16.

⁽³⁾ Detailed figures are given in table 2, page 24.

⁽⁴⁾ This, like the figure cited for manufacturing investment, represents an estimate of the underlying rate of growth—i.e. after adjusting the recorded figures for the effect of the modification of investment grants introduced at the end of 1968. Estimates of this effect are given in footnote (c) to table 2, page 24.

⁽¹⁾ That is, assuming that world export demand in each particular market (commodity and area) had risen uniformly by the same 17 per cent amount. See National Institute Economic Review no. 47, February 1969, page 12, chart 3, for a diagramatic exposition of the relationship between the rise in potential export demand, taken in the case of last year to be 17 per cent on the ‘neutral’ assumption, and past actual export performance.

⁽²⁾ The rise in the value of imports of goods and services in balance of payments terms, probably some £470 million after excluding imports of US military aircraft, was largely due to higher prices (unit values).

⁽³⁾ The figures quoted refer to year-on-year growth rates, and throughout exclude from imports the payments for US military aircraft. The fourth quarter-on-fourth quarter figures show a decline in import growth during 1969 from 6 3/4 to 1/4 per cent against a deceleration in output from an increase of 4 per cent to one of only 11/2-13/4 per cent.

⁽¹⁾ See National Institute Economic Review no. 47, February 1969, pages 13-14 for an example of the kind of equation referred to, and further references.

⁽²⁾ Stockbuilding is generally assigned a rather higher marginal import coefficient than other elements of expen diture in equations of the kind referred to. But given the margin of error in the measurement of stockbuilding, some caution is needed before attributing too much to its decline. The published figures of stockbuilding would show a rather greater contribution to the deflation of import growth from this source than we have assumed in using as our measure of stockbuilding figures which are inflated by the ‘residual error’ between published expenditure-based GDP and ‘compromise’ GDP.

⁽³⁾ We earlier suggested that the scheme might operate (excluding speculative effects) to reduce imports on a first round by anything between £50 and 125 million (and perhaps more) at current prices (see National Institute Economic Review no. 47, February 1969, page 85), and now incline to the lower end of this range. The fact that foreign suppliers have been estimated as responsible, in one way or another, for supplying about one third of the total of import deposits is, of course, germane.

⁽⁴⁾ It may seem odd to attribute some effects to the deposit scheme and none to devaluation. But the deposit scheme is, of course, different from devaluation in some relevant respects: first of all it came after and on top of devaluation; secondly, it affects only the potentially most sensitive goods; thirdly, it exercises quantitative monetary effects as well as ‘sur charge-like’ effects; fourthly, it is temporary. It is important to note that the decline in stockbuilding and the effects of the scheme may not be independent because of the scheme's monetary effects.

⁽⁵⁾ Economic Trends, January 1970, table A, page xiv.

⁽¹⁾ The ‘credit effect’ (shown in table 5, page 45), which is calculated as the weighted sum of changes in net borrowing from these financial institutions, was consistently negative throughout 1969 and showed a cumulative fall of nearly £90 million by the end of the year.

⁽¹⁾ Although the same thing had happened during 1968, the latter was a year of fast output growth and faster rises in prices and followed the ending of a stringent and effective phase in incomes policy.

⁽²⁾ Table 9 of the Statistical Appendix gives a breakdown of consumers' expenditure. It can be seen from this that consumers' expenditure on cars was down by 9 per cent in the year (with a 12 per cent fall in registrations); on radio, electrical, etc. goods by 4 per cent; and on furniture and floor coverings by 7 per cent. Spending on categories most affected by tax increases (alcoholic drink and tobacco) was also particularly depressed.

⁽³⁾ The latest estimates show a surplus for 1958 of £344 million, and there are no annual figures for the intervening years showing a surplus even half as large as this.

⁽⁴⁾ Full fourth quarter figures for the long-term capital account are not yet available. In the first three quarters of the year it was in deficit to the tune only of £7 million. In the fourth quarter, capital outflow on government account was probably resumed at the rate of about £40 million; on private account, there may have been little net flow in either direction.

⁽⁵⁾ CSO, ‘The United Kingdom Balance of Payments 1969’, page 87.

⁽⁶⁾ National Institute Economic Review no 47, February 1969, pages 36-40. It is more convenient to compare predicted and actual changes than levels because this obviates the need to account directly for the intervening discovery of under- recorded exports.

⁽¹⁾ The difference between this figure and the 1 1/2 per cent increase quoted in table 6 (page 13) is a result of differences in coverage; the latter figure is based on Trade and Navigation Accounts definitions and in particular excludes deliveries of ships to UK owners overseas.

⁽²⁾ Some further details of exports and imports of goods are given above, on pages 10-12.

⁽³⁾ These figures are based on cash flows rather than accruals, and from the point of view of timing are thus not reliable indicators of earnings.

⁽⁴⁾ Particularly in the summer months, when Euro-dollar rates exceeded local authority yields in the United Kingdom even on an uncovered basis.

⁽¹⁾ See Economic Trends, December 1969, table II (page xxviii). The types of claims and liabilities covered in this analysis include, on the liabilities side : current and deposit accounts, funds with local authorities and hire purchase finance houses, British government securities and treasury bills, non-interest bearing notes and commercial bills and promissory notes; and on the claims side: advances and overdrafts, commercial bills, promissory notes and accep tances.

⁽²⁾ See National Institute Economic Review no. 47, February 1969, page 29.

⁽¹⁾ But then, the expectation of these declines was no doubt part of the reason for the intensification of regional policy.

⁽²⁾ Some evidence for this is given by the size of the regression coefficients attaching to the figures of employees in employment when the number of total employees (employed and unemployed) is regressed on them. If all redundant workers were to leave the labour force the coefficient would be 1; if all were to register as unemployed the coefficient would be 0. The coefficients for Great Britain and the major coal-mining regions, estimated from quarterly data, are as follows : Great Britain, 0.78; North, 0.89; Yorkshire and Humberside, 1.00; Wales, 0.90. The coefficients for the mining regions are all considerably higher than the average.