^{note (1) page 4} In table 1, for ease of presentation, we have pursued our usual practice of giving ‘compromise’ GDP as an average of the three (income, output, and expenditure) measures, reducing the recorded stockbuilding figures to effect the reconciliation of the expenditure components with the GDP total. It needs to be borne in mind in considering the sub sequent forecast growth rates that the level of output shown for the fourth quarter of 1968, even after averaging, is probably artificially high.

^{note (1) page 6} For ease of reference, we have also reprinted from the Financial Statement the conventional table giving details of the tax changes and their estimated effects on revenue. This appears on page 19 below.

^{note (2) page 6} M. Krzyzaniak and R. A. Musgrave, ‘The shifting of the corporation income tax’, Baltimore 1963.

^{note (3) page 6} See particularly, M. Krzyzaniak (ed.) ‘Effects of cor poration income tax’, Detroit 1966.

^{note (4) page 6} R. J. Gordon, Incidence of Corporation Income Tax’, American Economic Review, September 1967, pages 731-756.

^{note (5) page 6} The value, in a full year, of the extra benefits has been officially estimated at £250 million, and the increase in rates of contribution at £360 million. Contribution rates are to be adjusted so that employers and employees contribute equally to this increase.

^{note (1) page 8} We have assumed a savings offset of 10 per cent against increased contributions, and only 5 per cent against the increase in current grants income flowing from the increased rates of benefit.

^{note (2) page 8} These were worked through, using the estimates in table 2 of the first round effects of the budget, on the basis of the model proposed by J. R. Shepherd and M. J. C. Surrey in their article, ‘The short-term effects of tax changes’, published in the National Institute Economic Review no. 46, November 1968.

^{note (3) page 8} The fact that, in table 1, the rate of growth of export volume in 1969 on 1968 is, all the same, less than the growth in 1970 on 1969 is due to the effect of the 1967 dock strikes in inflating the 1968 figures.

^{note (4) page 8} A comparison of this forecast with the Treasury's and other forecasts appears below, on pages 16-18.

^{note (5) page 8} More detail of the investment forecast is given on pages 15-16.

^{note (1) page 9} The revisions do, however, as foreshadowed in the February Review, page 20, give some room to think that the savings ratio was abnormally low, perhaps for reasons con nected with the stock exchange boom.

^{note (2) page 9} National Institute Economic Review no. 47, February 1969, page 21.

^{note (1) page 10} See table 4.

^{note (1) page 11} See the National Institute Economic Review no. 47, February 1969, pages 13-18 and 34-36.

^{note (2) page 11} We should estimate the budget alone as having the effect of reducing the likely growth in the volume of imports of goods and services in 1969 (compared with 1968) by about 1/3 per cent.

^{note (3) page 11} We are thinking of the effect of the prior deposit scheme (including an estimate of an anticipatory postponement of imports immediately prior to its removal) as reducing imports in 1969 by some £60-£80 million in 1963 prices.

^{note (1) page 12} The Times Business News, 9 May 1969. The LCES interpretation suggested a current account surplus of £20 million at unchanged terms of trade. Including their sug gested figure for possible gains from the terms of trade, this would rise to £40 million. However, their figuring includes payments to be made this year for US military aircraft, which our figures exclude. An adjustment for this might bring their surplus to a figure of over £100 million to compare with ours of £25 million. Our forecast incorporates a much larger estimate of the possible gains from the terms of trade than the £20 million suggested by LCES, and although we have assumed a less favourable net property income it is clear that there are some quite large differences between ourselves and the Financial Statement about the volume of goods and services imported and exported. (This is confirmed in the comparison given on pages 16-18 below between our respective forecasts for the growth in output and components of demand.)

^{note (1) page 16} Ibid. page 13, table 4.

^{note (2) page 16} Financial Statement and Budget Report 1969-70, pages 9-13.

^{note (1) page 17} Some details of this were published in The Sunday Times, 27 April 1969.

^{note (2) page 17} The Times Business News, 8 and 9 May 1969.

^{note (3) page 17} This is one reason for the discrepancies shown, as between the forecasts, in the behaviour of some of the series in 1968. There are also certain conceptual differences; for example, the NIESR figures for stockbuilding include the difference between ‘compromise’ GDP and expenditure- GDP (table 1), and the LBS GDP figures relate to the expenditure-based estimate of that item.

^{note (4) page 17} A further reason for the upward divergence of the LBS forecast relates to their view of the factor cost adjustment.

^{note (5) page 17} For public authorities' current expenditure, total final expenditure, and imports of goods and services, the LCES figures appear to include payments for US military aircraft, which NIESR figures exclude. A correction for this would very probably enlarge the discrepancy between two forecasts so far as the vital matter of the rate of growth of imports is concerned.

^{note (1) page 18} Financial Statement and Budget Report, 1969-70, page 9.

^{note (2) page 18} Equations explaining the level of imports in terms of the elements of total final sales and stockbuilding, generally associate co-efficients with the latter variable twice the size of those associated with total final sales.

^{note (3) page 18} Taken as a whole to remove distortions associated with the anticipation of, and the actual removal of the prior deposit scheme.

^{note (1) page 20} Regardless of capacity constraints, it is clear that the impact of investment demand on imports is particularly high— see National Institute Economic Review no. 47, February 1969, pages 35-6 (and chart 1 on page 35 there).