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Chapter I. The Home Economy
Published online by Cambridge University Press: 26 March 2020
Extract
When we carried out our forecasting exercise in February, we were awaiting a decision about another incomes policy beyond August and, on the exchange rate assumption we made then, which corresponded to the authorities‘ stated aim of 'maintaining competitiveness', we could foresee no improvement in the current external balance within the forecast period. The Budget was yet to come but it seemed clear to us that the Chancellor had little room for tax cuts, given the external position. We advocated an incomes policy with a low norm, combined with a modest amount of devaluation designed to start improving the current balance; a small tax cut of £½ billion could, we thought, be incorporated to assist acceptance of the incomes policy without preventing this improvement.
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- Copyright © 1976 National Institute of Economic and Social Research
References
Note (1) page 9 The April figures just released show a smaller import price increase than we expected; this may reflect a lengthening of lags or possibly these estimates will be revised.
Note (1) page 17 Economic Policy Review, No. 2, University of Cambridge Department of Applied Economics, March 1976. Table 1.9, p 10.
Note (2) page 17 ‘The London Business School quarterly econometric model of the UK economy; relationships in the model, April 1976’, forthcoming Discussion Paper of the Econo metric forecasting Unit, London Business School.
Note (1) page 18 J. C. Townend, ‘The personal saving ratio’, Bank of England Quarterly Bulletin, March 1976.