^{Note (1) page 4} Our estimate, which is slightly below the first official preliminary estimate, is supported by the revised official figure.

^{Note (2) page 4} Our volume figures for exports of goods and services so far this year differ from the published official series (and in the case of the third quarter, from the first official preliminary estimate) by amounts which represent our estimate of the revision to which these figures are likely to be subject, given the revision to the series for the value of goods exports indicated in the statement on October trade.

^{Note (3) page 4} Because of the distortions created by the postal strike and other disputes.

^{Note (4) page 4} These items are termed ‘exogenous' in the sense that their development over the forecast period depends very little upon the way in which the economy as a whole is expected to develop.

^{Note (1) page 6} See, as an example of a possible small effect, R. J. Ball, J. R. Eaton, and M. D. Steuer, ‘The relationship between United Kingdom export performance in manufactures and the internal pressure of demand’, Economic Journal, Septem ber 1966, and for the credit given to this effect in the context of a short-term forecasting model, J. R. Shepherd and M. J. C. Surrey, ‘The short-term effects of tax changes’, National Institute Economic Review, no. 46, November 1968.

^{Note (2) page 6} See chapter 3, ‘Trade and payments' by G. D. N. Wors wick, in Sir Alec Cairncross (ed.), Britain's economic prospects reconsidered, Allen and Unwin, 1971.

^{Note (1) page 7} This compares with an estimated rate of earnings inflation during this year (i.e. between the fourth quarters of 1970 and 1971) of something like 12 1/2 per cent.

^{Note (2) page 7} Compared with its level in the same period 12 months earlier, however, the index (men: all industries) was still 12 per cent up in September.

^{Note (1) page 8} The inflation registered by the retail price index is some what greater than is recorded by the CPI (the consumer price index, or implicit deflator of the official series of the volume of consumers' expenditure), the index shown in table 4. For a comparison of these two indices over a longer period, see table 7 of the Statistical Appendix.

^{Note (1) page 9} This is taking the private and public sectors together. See National Institute Economic Review, no. 57, August 1971, pages 15-16.

^{Note (2) page 9} See F. T. Blackaby, ‘Incomes policies and inflation’, pages 34-53 of this Review, and on this question in particular, page 49.

^{Note (3) page 9} After allowing for the effects of credit, the savings ratio shows a tendency to fall throughout the forecast period.

^{Note (1) page 10} The British Market Research Bureau, describing the results of its October survey, has commented that ‘Consumer confidence, as measured by people's (‘all adults’) expectations for the next twelve months, remains sadly depressed, with 37 per cent expecting things (‘general economic conditions’) to get worse, and only 23 per cent expecting them to get better; these figures are an improvement on those recorded in the troughs of February/March and June of this year, but below those recorded during most of 1970’.

^{Note (2) page 10} These three methods were as follows: the standard aggregate import function relating imports of goods and services in total to total final sales, stockbuilding and the national income accounting discrepancy; the OECD trade model (of which further results are reported on pages 29-33 below); and a system of disaggregated import functions. The latter two methods pointed to the continuation of the higher rate of import leakage and the disaggregated system suggested that the unexpectedly low imports recorded in the third quarter were largely confined to two particular cate gories (fuel and food) rather than being spread ‘across the board’.

^{Note (3) page 10} See the CBI Industrial Trends Survey for September 1971, which reports negative balances of ‘ups' and ‘downs’ to questions about the expected trend in stocks (both of raw materials and brought in supplies and of finished goods) over the next four months.

^{Note (1) page 11} Although, on a seasonally unadjusted basis, the third quarter's current account surplus was probably lower than the adjusted figure shown in table 5, it probably contributed some £300 million to the £581 million change in reserves which took place over the quarter. Allowing only for known repayments of debt to the IMF and official short-term swaps extended to the US Federal Reserve System amounting together to about £575 million, inward capital flows seem therefore to have amounted to around £800 million; the true figure is likely to have been even greater than this.

^{Note (1) page 12} The estimate of the current account out-turn for the third quarter, a surplus figure of £336 million, exceeds by almost £150 million the surplus we forecast three months ago, when the visible trade results for July were already known.

^{Note (2) page 12} Thus, between the second halves of 1971 and 1972 our output forecast is for a rise of only just over 31 per cent.

^{Note (1) page 13} Frank Blackaby, ‘Incomes policies and inflation’, pages 34-53.

^{Note (1) page 14} The DTI survey for September/October reported in Trade and Industry, 14 October 1971, and the CBI Survey for September give the results of two major inquiries. Some evidence from a questionnaire circulated to the National Institute's business panel is described below (page 15).

^{Note (1) page 15} The CBI Industrial Trends Survey for September indicated no effect on stocks over the succeeding four months, and in this short run it certainly seems quite likely that manufacturers will not be raising inventory levels. However, sooner or later— if the demand prospects remain as good as predicted— restocking is likely to take place. The question of timing cannot, however, be given a very precise answer.

^{Note (2) page 15} The ‘prices’ quoted by firms represented on the business panel are a mixed bag. The wholesale price index (home sales) of engineering and allied industries is perhaps the closest published correlate of the implicit index concerned; and, by way of comparison with the 5 per cent (plus) rise indicated for 1972, this index had risen by over 8 1/2 per cent in the twelve months to August. Some slowing down of inflation is there fore fairly clearly indicated.