^{note (1) page 4} The estimate in the November Economic Review was 3 per cent.

^{note (2) page 4} Total exports of manufactures in the fourth quarter of 1964 were 31 per cent higher than a year earlier; but exports of manufactures excluding machinery were 6 1/2 per cent higher.

^{note (1) page 6} For the same reason—because nearly all school-leaving is at the end of the summer term—the unemployment per centage appears to have deviated from its downward trend in August and September (Statistical Appendix, table 6).

^{note (1) page 7} In the Industrial Inquiry, there was some tendency for firms to make more favourable references to the rebates after the specific industry rates had been announced.

^{note (1) page 8} This is the equivalent of a reduction in the working week from 42 to 41 or 40 hours.

^{note (2) page 8} See W. A. H. Godley and D. A. Rowe, ‘Retail and Consumer Prices’, National Institute Economic Review no. 30, November 1964, page 44.

^{note (1) page 9} This is the estimate derived from using past aggregate relationships between final sales, stockbuilding and imports, and then making an allowance for the effect of the surcharge. An estimate based on a separate examination of the prospects for food, basic materials, fuel and semi and finished manu factures would give a rather higher figure.

^{note (1) page 10} See table 2, page 8, of National Institute Economic Review, November 1964.

^{note (2) page 10} This calculation is derived as follows. The reserves at the beginning of 1964 were £949 million. Since then, up to the end of January, the current and long-term capital deficit must have been of the order of £750 million. £128 million of this was financed by the fall in the reserves, and perhaps £200 million by an increase in net short-term liabilities to the sterling area. The rest-about £425 million—must have been financed by the drawings on the IMF and central bank credits, less reductions in other net short-term liabilities to the non-sterling area. In the long run, even given a return of confidence, there seems no reason to suppose that the non-sterling area will wish its sterling assets to be much higher than they were at the beginning of 1964.

^{note (3) page 10} This assumes that the Government is successful in replacing a sufficient part of the overseas central banks' credit with a further drawing on the International Monetary Fund. These drawings have to be repaid in three to five years; but in the past most countries have repaid their drawings within three years.

^{note (1) page 11} The Exchange Equalisation Account could, theoretically, augment the reserves by selling its portfolio of dollar securities, worth currently some £450 million. However, this would at the moment probably weaken the defences of the dollar more than it would strengthen the defences of sterling.

^{note (2) page 11} This is less than the £350 million—the annual rate of deficit shown in table 3 for the first half of 1966—because it is assumed that if vigorous action is taken to improve the balance of payments, there will be a confidence effect which reduces the net outflow of long-term capital; secondly, it will be less necessary to use a very high Bank rate to prevent the outflow of short-term capital, and so, assuming the Bank rate can be brought down, interest payments on the sterling balances and other short-term liabilities would be lower.

^{note (3) page 11} In November, the Review suggested, in a more general way, that ‘In the next two years or so, the Government has to find some more permanent way of shifting some £500 million of resources into the balance of payments’. This is not inconsistent with the present figure, which attempts to calculate specifically the shift of resources needed in 1966; a further big shift will be needed in 1967.

^{note (1) page 12} This is at factor cost, because exports have very little indirect tax content, and consumers' expenditure indirect tax content is relatively high.

^{note (2) page 12} On present policies (table 1) consumers' expenditure in real terms is expected to rise some 3½ per cent between the fourth quarter of 1964 and the second quarter of 1966. If we assume that over that period some £200 million of real resources (at an annual rate) is transferred from consumers' expenditure to exports, then the rise in consumers' expenditure is reduced from 3½ to 2½ per cent.

^{note (1) page 13} A given improvement in the British balance of payments, no matter whether it is brought about by deflation, import quotas, or stimuli to exports, worsens the balance of pay ments of the rest of the world by the same given amount. It should therefore be a matter of relative indifference to other countries which methods are used.