^{note (1) page 4} From the fourth quarter of 1964 to the first quarter of 1965, industrial production rose 1 per cent. (The drop between January and March 1965 is probably not meaningful). Provisional expenditure estimates suggest a bigger rise in national output than the industrial production figure would, by itself, imply.

^{note (2) page 4} This includes an estimate for a ‘normal’ balancing item.

^{note (3) page 4} In subsequent rounds of the forecast, the first estimates of fixed investment and exports may be revised. For example, if, at a later stage of the forecast, it appears that there will be a very high pressure of demand for labour throughout the period, the fixed investment forecast might be revised up wards, and the export forecast downwards. In the general description given in the following sections, these various iterative processes of second and third round adjustments are omitted.

^{note (1) page 6} Between 1962 (the yearly average) and the fourth quarter of 1964, on seasonally adjusted figures, the number of houses under construction rose 41 per cent. The volume of invest ment in housebuilding rose only 33 per cent.

^{note (1) page 7} For example, National Institute Economic Review no. 31, February 1965, page 8; no. 30, November 1964, page 16; and no. 25, August 1963, page 9.

^{note (2) page 7} These transfers also appear as a positive item in exports of goods and services. In table 1, we have attempted to take them out altogether; they only obscure the trend in both items, and will make interpretation of the series more difficult for economists who wish to use them in the future. In any case, it would be helpful if, when transactions of this kind are included in the national accounts, this could be noted at the time; otherwise, inevitably, those who use the figures are misled.

^{note (1) page 10} The forecasts by now include a large number of assumptions about the consequences of tax changes and other meas ures. These have been grouped together in the Appendix, page 18.

^{note (2) page 10} For a fuller description of the implications, see ‘An Analysis of Tax Changes’, page 33.

^{note (3) page 10} See, for example, ‘Dynamic demand functions : some econometric results’, by Richard Stone and D. A. Rowe, in Economic Journal volume LXVIII, June 1958, page 256. Some more recent unpublished analyses have also been taken into account in arriving at the elasticities given in the present paragraph.

^{note (1) page 12} A full description of the technique used is given in the Appendix to ‘An Analysis of Tax Changes’, on page 33 of this number.

^{note (2) page 12} See Appendix page 21.

^{note (3) page 12} The published Board of Trade import price index for food, beverages and tobacco shows a sharp increase in January. This was entirely statistical, due to a change in the Trade Accounts valuation system for sugar. Excluding this effect, the index fell :-

^{note (1) page 15} The assumptions about the effects of the surcharge are shown in the Appendix, page 22.

^{note (1) page 17} Excluding reserve changes and net aid receipts.

^{note (2) page 17} Past movements in the balancing item suggest that, though for the year as a whole the estimates tend to be sub stantially too unfavourable, the tendency in the fourth quarter is to overestimate net receipts or underestimate net pay ments to the extent of some £40-£50 million. The figure of £27 million represents the difference between the actual £72 million and the £45 million taken as ‘normal’.

^{note (3) page 17} National Institute Economic Review no. 31, February 1965, page 27.

^{note (1) page 19} Our figures also include estimates for the effect of the surcharge in making foreign exporters cut the price of goods exported to Britain. For this we have allowed £30 million in the first half of 1965 and £20 million in the second.

^{note (1) page 20} This is at current prices. An assessment at 1958 prices is given in the Appendix which follows.