The recovery in economic activity which took place in the third and fourth quarters of 1968 has been sharply braked in the first three months of this year.

However, the picture provided by the published national income statistics of the movement in output in the last quarter of last year is a confusing one : the income and output measures showed increases of 1 per cent on the third quarter level, whilst the expenditure-based measure showed a rise of some 3½ per cent. Averaging the three gives an increase of nearly 2 per cent, but even this should probably be regarded as an overestimate of the true rise in output ; the expenditure figures throughout 1968 showed considerable variations, associated with marked movements in consumers' expenditure which were probably not correctly offset by changes in the recorded stockbuilding figures, and the fourth quarter of 1968 again saw a very large rise in consumers' expenditure, partly reflecting anticipation of the November measures.

The expansion of the world economy continues to exceed expectations, largely because last year's tax surcharge has failed to limit growth in the United States to the extent intended. World industrial production, adjusted for the effects of special factors (see below) rose at an annual rate of about 8 per cent between the second quarter of last year and the first quarter of this year, and the momentum is probably sufficient for an increase of at least 4½ per cent in 1969 in the combined national outputs of the industrial countries, although the rate of expansion may slow down considerably before the middle of next year.

This article examines from two angles changes in the competitiveness of United Kingdom exports since devaluation. First, it considers both in total and in some area and commodity detail recent changes in the United Kingdom's share of world trade in manufactures, particularly between the periods October 1966/September 1967 and October 1967/September 1968, and compares them with previous changes over the whole period from the mid-1950s. Secondly, it gives the results of some special inquiries conducted at the end of last year among business firms in Australia, New Zealand, and South Africa and earlier (and on a smaller scale) in West Germany.

The advance in industrial techniques since the second world war has been spectacular. The steady rise in the number of consumers and the standard of their requirements has meant a growth in demand which, since resources such as land and labour can be increased only slowly if at all, can be met only through progress in methods of production. Competition among producers has provided a strong incentive in the same direction. As a result human activity has been channelled into ‘research and development’ on a scale unique in history, and many authorities believe that the advance in the application of scientific progress is tantamount, with all its social and other consequences, to a second industrial revolution.