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The Economic Situation
Published online by Cambridge University Press: 26 March 2020
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It still seems probable that the rise in output which can be expected in 1961 will be retarded for a while by reduced stock-building, in reaction to the heavy stock accumulation in 1960. Nevertheless, final demand is probably buoyant enough now to result in some expansion during the first half of 1961. British exports, which show signs of expanding rather faster than might have been expected, should benefit, of some extent later in the year from the revaluation to the German mark; but the balance of payments is likely to remain in substantial overall deficit—a situation the more serious after the heavy deficit of 1960. Budgetary policy is therefore unlikely (see page 14) to be expansionary.
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- Copyright © 1961 National Institute of Economic and Social Research
References
(1) In the third quarter of 1960, there was an abnormal cluster of expenditures in the steel industry (associated with the ending of companies' financial years) which may not have been wholly smoothed out by the seasonal adjustments.
(1) The price elasticity of demand for exports of a country such as Germany is very uncertain. The text implies it is at least 2. Some experts would put the figure much higher than this.
(2) National Institute Economic Review, no. 13, January 1961, table 12, page 17.
(1) From a report of the Council of Economic Advisers prepared for Congress. The Guardian, March 8, 1961.