The reflationary measures taken in mid-July have had an immediate and substantial effect on consumer credit, and on demand for cars and other durable goods. Although demand in other sectors of consumer spending has, on the showing of the retail sales figures, continued to be rather weak, it seems likely that consumers' expenditure as a whole was over 1¼ per cent higher in the third quarter of the year than it had been in the second quarter, and some 2½ per cent higher than the average reached in the first half year. A good rise was also registered in exports in the third quarter, the volume of exports of goods and services probably increasing by about 1 per cent on the second quarter level. At the same time, the volume of imports declined. Although fixed investment and public authorities' current expenditure probably contributed little or nothing to the expansion of demand, the increases in exports and consumption are big enough to suggest a rise in total final sales (excluding stockbuilding) of about 1 per cent between the second and third quarters: against the average of the first half year, which is a fairer comparison to make, the increase was probably about 2 ¾ per cent.

Economic growth in the industrial countries fell short of our expectations during the summer, particularly in Japan and Italy and to a lesser extent in West Germany. Despite the resumption of growth in the United Kingdom and a firmly upward trend of production in North America, the aggregate output of the OECD countries increased only slowly and for the year as a whole the rise in their GNP may not reach 3½ per cent in real terms.

In recent years, the National Institute Economic Review, in its appraisal of the economic situation, has often taken the line either that an incomes policy was needed, or that existing incomes policies should be strengthened. The term ‘incomes policy’ is a vague one: and the main purpose of this article is to be more specific.

An article in the National Institute Economic Review in May 1969 described the first results of an inquiry on which the National Institute has been engaged since 1967, in collaboration with research institutes in a number of other countries, into the diffusion of new technology in industry. Ten techniques were originally studied, of which eight were subsequently selected for investigation in greater depth. These included the use of the shuttleless loom in weaving (discussed in a Review article in August last year) and of the tunnel kiln in brickmaking, with which the present article is concerned.

Our original note on the effects of the imposition of Selective Employment Tax (SET) was published as a background to the judgement expressed in the same number of the National Institute Economic Review that the reduction and removal of the tax would not have significant adverse effects upon productivity in distribution. Professor Reddaway's subsequent Reply gives general support to this judgement, which we are pleased to have. The difference between him and ourselves is solely concerned with the effects of the original imposition and subsequent increase of SET, which, we had argued, were smaller than appeared to be implied by the Reddaway Report.