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Published online by Cambridge University Press: 26 March 2020
The forecast ‘on unchanged policies’ is not a forecast of what is likely to happen, since unemployment in the winter of 1968 would probably reach a recorded figure of 650-700 thousand, with still a strong underlying upward trend. The Government, even if it has accepted the idea of running the economy with a higher level of unemployment—say 2 1/4-2½ per cent— will need to intervene, and probably need to intervene fairly soon (page 30) if the figure is to level off within these margins.
note (1) page 14 Economic Growth 1960-1970, A third-decade Review of Prospects, OECD, Paris 1966.
note (1) page 21 £944 million borrowed from the International Monetary Fund and Switzerland, plus an undisclosed amount out standing in Central Bank aid, less about £50 million net repaid to the IMF by the end of 1966 as a result of other transactions, mainly drawings of sterling by other countries.
note (1) page 22 The Growth of the Economy, March 1964, NEDC.
note (2) page 22 NEDC, Imported manufactures : an inquiry into com petitiveness, HMSO, London 1965.
note (1) page 24 In the National Plan the concept of output used was GNP—while we work with GDP. The Plan figures were in 1964 prices—while we work in 1958 prices. There are also small differences in the definitions of items 3, 4 and 11 as used here and as given in the National Plan. In these calculations, however, we only make sure of certain percentage increases from the Plan as aids in fixing rough guesses for items 2, 3 and 4, for the year 1970.
note (1) page 25 We pin this calculation to the whole period 1964 to 1970, rather than start afresh from 1967, on two grounds. First, for 1967, we have as yet only a forecast; second, this forecast, if realised, would make 1967 manufacturing invest ment turn out below the 1964 level, and we might consider 1967 as abnormally below trend.
note (2) page 25 ‘Long-term projections compared’, National Institute Economic Review No. 34, November 1965, page 30.
note (3) page 25 See D. C. Paige, Chapter 12, pages 378-80, in W. Becker man and Associates, The British Economy in 1975.
note (1) page 26 There are two qualifications to this comparison : in 1964-70, the labour force will be rising more slowly, and working hours probably falling faster, than in 1954-64.
note (2) page 26 Control of Public Expenditure, Cmnd. 1432, HMSO, June 1961.
note (1) page 27 It is not likely to be as easy as in the past to take advan tage of any inflow of short-term capital—official or unofficial- to raise the increase in output. For a long time ahead, sterling will be on probation; foreign opinion is likely to become uneasy as soon as it appears that the current and long-term capital surplus is being significantly reduced.
note (2) page 27 These increases would unfortunately be more likely to be required, rather than less likely, if incomes policy succeeds in continuing to hold the rise in money incomes and prices. This is because inflation is a tax gatherer : when incomes and prices are regularly rising, as wage-earners move up into higher income-tax brackets, the rise in real disposable income after taxes is slowed down.
note (1) page 28 Some reduction has already been assumed : see Appendix I, page 74.
note (2) page 28 Over the period 1955-66, British export prices of manu factures rose on average 2.3 per cent a year. The export prices of manufactures of our main competitors, in aggregate, rose 0.9 per cent a year.
note (3) page 28 Estimates were examined both for manufactured goods as a whole and for different categories of manufactures; the price elasticities used in this tentative calculation were around 3 for imports of manufactured goods and around 2 for exports of manufactured goods.
note (4) page 28 An equivalent improvement is assumed for the relation ship between home prices and import prices of manufactured goods.
note (1) page 29 One additional difficulty here is that the period is begin ning at a time when company profit margins are particularly low (chart 3, page 6), and firms are naturally anxious to improve them if possible by raising prices.
note (2) page 29 This influence on prices is distinct from the alleged influence on the balance of payments of reduced pressure on demand. The argument in that case is that manufacturers, deprived of home sales, are forced to seek export outlets. Another argument is that the reduction in the pressure of demand reduces the length of order books so that fewer exports are lost because of over-long delivery dates. There is some evidence of this pressure of demand effect, but it is our belief that it is essentially a short-term phenomenon. In the longer term one has to bring into the picture the consequences for investment and innovation of lower pressure of demand.
note (3) page 29 The National Plan, page 24, para. 7. ‘The underlying annual growth of output per head … has been accelerating from about 2 per cent in the early 1950s to nearly 2 3/4 per cent during 1960-64 and has probably now reached about 3 per cent.’
note (4) page 29 Output per employed person in the United States rose 1.2 per cent a year from 1955-60, and 2.9 per cent a year from 1960-65.
