⁽¹⁾ ‘In total, therefore, the increase in home demand over the next twelve months looks like being substantial. Since it is so necessary to keep the way clear for exports, this must be carefully watched. By the end of 1962—and it is no good our trying to avoid facing this possibility—the cumulative effect of all the factors I have mentioned could result in too great a call on our resources if we do not keep the balance right.’ Chancellor of the Exchequer, in his Budget speech, Weekly Hansard No. 555, col. 965, (April 9th, 1962).

⁽²⁾ The prospect … would probably leave the margin of spare plant capacity in the British economy at the end of this year as ample as it is now, and unemployment may be higher.’ National Institute Economic Review, no. 19, February 1962, page 3. A year ago we expected a 3 per cent rise in national output during the year ending in the fourth quarter of 1962. Even this may turn out to have been too high, mainly because we expected exports to go on rising for longer than they did.

⁽³⁾ This is discussed in the National Institute Economic Review, no. 21, August 1962, table 4 and chart 4, page 8.

⁽¹⁾ The Institute's annual Industrial Inquiries are centred on the metal-using industries. Their principal object is to make a rough estimate of the amount of spare capacity available, and the obstacles which may exist to the growth of output. Firms are also questioned about the change in their output, exports, employment and hours of work and their expectations for the coming year. In the most recent inquiry about 140 firms were interviewed with a total employment of just over 1 million persons. Provisional results were released to the press on January 11. The figures used here differ only very slightly, incorporating data from a few additional respondents.

⁽¹⁾ Throughout this section the figures exclude deliveries of ships and aircraft, which tend to be erratic and independent of general trends.

⁽¹⁾ National Institute Economic Review, no. 19, February 1962, page 11. We expected a rise of 1 1/2 to 2 per cent in real consumption between the fourth quaiters of 1961 and 1962, with about a 10 per cent rise in durable goods. The actual rise in cars and durables was greater than we expected, but we forecast on the assumption of no change in credit terms or purchase tax.

⁽²⁾ National Institute Economic Review, no. 20, May 1962, page 17 and Table 11.

⁽³⁾ Based on the definition given in National Institute, Economic Review, no. 22, November 1962, chart 8 on page 16.

⁽¹⁾ The prospect for imports was discussed at some length in the November National Institute Economic Review, pages 19 and 20 and chart 10.

⁽¹⁾ It is difficult to account for the very high balancing item by unidentified short-term capital inflows; for neither the published figures nor market reports suggest any large-scale short-term inflows after the first quarter.

⁽¹⁾ Non-sterling countries have been reducing their sterling holdings as conventionally defined, while investing more in other types of short-term assets. Presumably this switching has been due to the interest rate structure-for example the high rates offered by local authorities. Now these rates have fallen, there seems less reason for them to do this.

⁽²⁾ Drawings by other countries, which amounted to about £40 million in 1961, and $70 million in 1962, may well be quite big again this year. But Canada will probably be making repayment of last summer's $300 IMF million drawing, and it is likely to do so partly in sterling (since United States dollars, like sterling, are now acceptable in repayments to the Fund only to the extent that they are used for fresh drawings by other countries).