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Chapter IV. Economic Policy

Published online by Cambridge University Press:  26 March 2020

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Extract

The present position can be summed up in this way:

  1. (1) Unemployment, seasonally adjusted—and allowing for the temporary effect of the cold-is probably now something over 2 1/2 per cent, and the underlying trend in January was still rising. (Each 1/2 per cent is about 110 thousand persons.) In addition, there are probably some 150 thousand people who would have joined the labour force last year if demand had been normal; and in 1963 the potential labour force—apart from any reduction in unemployment—is likely to rise by nearly 200 thousand. Altogether, employment could rise by something like 400 to 500 thousand (or 2 per cent) before there was any question of an overall excess demand for labour.

Type
Articles
Information
National Institute Economic Review , Volume 23 , February 1963 , pp. 43 - 50
Copyright
Copyright © 1963 National Institute of Economic and Social Research

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References

(1) National output rose 1 1/2-2 per cent from the end of 1961 to the end of 1962. The expansionary measures so far taken—purchase tax reductions, increases in public investment, and the increases (net of higher contributions) in social benefits—are probably responsible for a good part of this prospective acceleration to 3 1/2 per cent a year.

(1) A report of a recent OECD working party, Policies for Economic Growth (OECD, November 1962), gives a succinct description of the United Kingdom economy in recent years : ‘The United Kingdom is a striking example of a country which was caught in a sort of vicious circle; a low growth rate made it difficult to avoid prices being pushed up by rising . money incomes; higher prices further weakened the com petitive position and intensified balance of payments diffi culties; and these developments made periodic restriction of demand unavoidable, which further interfered with growth.’