No CrossRef data available.
Article contents
Chapter I. the Home Economy
Published online by Cambridge University Press: 26 March 2020
Abstract
This chapter is in two main parts. The first contains a survey of economic developments in 1982. It begins with a brief account of economic policy; succeeding sections deal with output and demand, inflation, and the balance of payments. It concludes with a discussion of the experience of individual industries over the past year, and since the beginning of recession in 1979. The second part of the chapter contains a short-term forecast to end-1984.
- Type
- Articles
- Information
- Copyright
- Copyright © 1983 National Institute of Economic and Social Research
References
Note (1) page 6 Financial Statement and Budget Report, 1980-81. page 19. paragraphs 15 and 16, and ibid. 1981-82. page 19, paragraphs 23-28.
Note (1) page 7 The national insurance surcharge, which the CBI had wanted the Government to abolish, was cut by a further 1 per cent, but employers' and employees' national insurance con tributions were both increased by ¼ per cent. The net result was to reduce expected total payments by £490 million in 1982/3 and by £320 million in 1983/4.
Note (2) page 7 All other sources of change in the financial deficit are treated as ‘discretionary’, including (for example) growth in revenues from expanding North Sea oil production.
Note (1) page 10 Although statutory restrictions were abolished entirely. pru dential restrictions are still imposed by individual credit grantors.
Note (2) page 10 The cut in mortgage rates may explain part of the increase in expenditure not accounted for by the removal of hire purchase restrictions. Although a general decrease in interest rates necessarily reduces the personal sector's disposable income since the sector is a net creditor, the short-run propensity to consume out of the ‘windfall gain’ from a cut in mortgage payments may be higher than that out of interest on building society shares and other saving.
Note (1) page 12 They are based on input-output estimates of the primary input composition of consumers' expenditure (Economic Trends. June 1978). The weights on income from employment, imports and indirect taxes were grossed up to sum to 100 after excluding ‘profits and other incomes’.
Note (1) page 14 The uncovered differential between the UK three-month Treasury bill rate and the three-month money market rate in Frankfurt. which had averaged 4.3 per cent in the first six months of the year and 2.5 per cent in the third quarter, fell to 2.3 per cent in October and 1.4 per cent in November. The differential between UK and US Treasury bill rates, which had averaged 1.4 per cent in the third quarter, peaking at 2.3 per cent in September, fell to 0.5 per cent in October, and was close to zero in November. The spot price of Forties oil fell from $34.50 per barrel in October to a little under $32.50 in November, and there was a further sharp fall in the first half of December, to around $30.00. Although there was subsequently a small rise, uncertainty about the future of oil prices increased with the failure of the OPEC meetings in Vienna and Geneva to reach agreement on individual country production quotas.
Note (1) page 17 There are other difficulties in comparing these two ratios: perhaps the most important of these is that they do not refer to comparable ‘population’. The products of the eighteen industry groups cover practically everything: within the same category the UK may be importing products that are quite different from those exported.
Note (1) page 18 The CBI questionnaire does not define ‘capacity’ and it is not altogether clear what economic concept the figures are measuring: thev are however believed to refer more closely to utilisation of plant and machinery than to that of all factors of production. See D. R. Glynn, ‘The CBI Industrial Trends Survey’. Applied Economics, 1969 and R. Price. ‘The CBI Industrial Trends Survey —an insight into answering practices’. CBI Review, Summer 1977.
Note (2) page 18 Such measures are discussed in the November 1981 Economic Review, pp.13-14.
Note (3) page 18 There is no direct evidence on the rate of scrapping. The National Accounts estimates of retirements from the capital stock arc based on fixed assumptions about the average lives of particular assets. This means that the recorded rate of depreciation is affected only by changes in the age structure of the capital stock or changes in its composition: it is insensitive to decisions by firms to reduce the economic life of their assets. The increasing import ance of replacement investment shown by recent surveys provides some tentative evidence that the rate of scrapping may have gone up. See G. C. Wenban-Smith, ‘Factors influencing recent productivity growth’, National Institute Economic Review, no. 101. August 1982.
Note (1) page 19 The unemployed are classified by industry according to the industry in which the unemployed person last worked. The figures tend to overstate the rate of unemployment in industries in which it is fairly easy to get work for short periods of time: if an unemployed worker takes a temporary job in another industry, when this job is finished and he becomes unemployed again, he will be shown as unemployed in the industry in which he got temporary employment. and not in the industry to which he may consider himself more permanently attached. It is probably partly for this reason that the recorded rate of unemployment in construction is so high.
Note (1) page 20 The forecast is not therefore strictly comparable with the Treasury forecast accompanying the Chancellor's November Statement, which allowed for a 'fiscal adjustment of £1 billion.
Note (1) page 22 A short description of the equation is given on p. 63.
Note (1) page 22 The figures for general government current expenditure on goods and services given in table 15, in constant prices, and in table 16. in current prices, are on the National Accounts definition. which differs slightly from the White Paper definition (Cmnd 8789. table 1.8) in that it includes a notional allowance for capital con sumption and an estimate of VAT paid by local authorities but refunded to them.