This chapter brings together a brief review of the economy in 1963 and a revised forecast of the trend of demand over the next eighteen months; it then looks in particular at the implications for the labour supply and the balance of payments; and finally it draws some conclusions about economic policy. The detailed justification of the individual forecasts is given in Chapter II.

This chapter provides the detailed backing to the forecasts summarised in Chapter I, and it also provides an account of the trends of demand in the various sectors in 1963. It begins with fixed investment and exports, and then looks at the consequences first for stockbuilding and then for incomes, employment, hours, prices and so for consumers' expenditure. Finally it summarises past trends in imports and the balance of payments.

Industrial production rose by about 6½ per cent during 1963, though the flatness in 1962 meant that the year-to-year rise was much smaller—about 3 per cent. The motor industry fared best of all, with a year-to-year rise of nearly a third in the output of cars and nearly a sixth in the output of tractors. Consumer durables recorded a 10 per cent rise, and the cold winter was mainly responsible for a 7 per cent increase in the amount of electricity generated. The only major industry to suffer a big fall in output was shipbuilding, though there was some decline in commercial vehicles, aircraft and railway vehicles. The rise in output during 1963 was rather slower than it had been during 1959. Some industries, including cars and consumer durables, expanded at about the same rate, but in others, such as metals, chemicals, clothing and paper and printing, the pace of advance during 1963 was considerably slower than it had been in the earlier recovery (chart 10).

1963 was a good year for world production and a very good year for world trade. Most industrial economies expanded quite strongly, and for the free world as a whole industrial production rose by about 5 per cent—not quite such a big rise as in 1962, but bigger than in 1961. The value of world trade increased very sharply, particularly in primary products : in the third quarter of 1963 trade was running at a level about 10 per cent higher than a year before, and there was probably another big rise in the fourth quarter.

The term national product is used in this note, for convenience, as shorthand for gross domestic product at constant factor cost. Where the word ‘output’ is used, it refers to the estimate of the national product from output data.