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Chapter II. The Home Economy

Published online by Cambridge University Press:  26 March 2020

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Extract

Since our last forecast a number of events has led us to form a slightly more pessimistic view of the outlook for the UK economy. These factors are principally a somewhat lower forecast for world activity levels as set out in the previous chapter, a steep rise in import prices in the first quarter of 1980, a small increase in the outturn of the current wage round over that previously forecast and a further depression in public expenditure planned in Cmnd 7841 for 1981 below that which we forecast under ‘unchanged policy assumptions’ before the budget.

Type
Articles
Information
National Institute Economic Review , Volume 92 , May 1980 , pp. 18 - 32
Copyright
Copyright © 1980 National Institute of Economic and Social Research

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References

Notes

(page 18 note 1) The Government's Expenditure Plans 1980-81 to 1983-84. Cmnd 7841, HMSO.

(page 20 note 1) The FS & BR measures GDP in current market prices, whereas our computation of the PSBR/GDP ratio in table 8 measures GDP at current factor cost. On the FS & BR definition the forecast ratio for 1981-2 is 2.96.

(page 20 note 1) Second Report from the Treasury and Civil Service Committee 1979-80, 30 April 1980, pp. 80-1.

(page 20 note 2) In oral evidence to the Treasury and Civil Service Committee (op. cit. pp. 99-100) the Chancellor of the Exchequer indicated that he expected that the changes for the nationalised industries, over the entire four-year period up to 1983-4 would be obtained in the following proportions: 25 per cent by elimination of ‘under pricing’ in gas and electricity, 40 per cent by productivity increases and rationalisation in loss-making industries (shipbuilding, steel, coal and rail) and the remaining one third from cashflow changes such as the unwinding of the Post Office billing delay and the increased profitability of BNOC.

(page 20 note 3) ‘Evidence by the National Institute of Economic and Social Research’. Report of the Treasury and Civil Service Committee (op. cit.) pp. 56-65. This evidence was prepared by S. G. B. Henry, D. G. Mayes and D. Savage and is available from the Institute on the same terms as our Discussion Papers, see p. 82.

(page 25 note 1) See for example Lease Finance for Europe in the Eighties, Hawkins Publishing, 1980.

(page 30 note 1) D. Savage, ‘Some issues of monetary policy’, National Institute Economic Review, no. 91, February 1980, pp. 78-85.

(page 32 note 1) Without forming any judgement about the specific means of achieving this, such as a voluntary agreement or statutory wage restraint.