Chapter Igives a brief general account of economic developments during 1967. It then discusses the prospect to mid-1969; it accepts the stated Government objective of a 4 per cent growth in national output through 1968 and 1969, and makes an estimate of the Budget requirements. (The appraisal of policy is included here.) There is then a section on the medium-term prospect up to 1972.Chapter IIdiscusses incomes policy.Chapter IIIadds some background to the details of demand.Chapter IVis the annual production chapter—including an attempt to derive from the general economic forecast a view about the prospects for different industries.Chapter Vgives the world background.

The increase in output in 1967 was little more than 1 per cent. During the year—from the fourth quarter of 1966 to the fourth quarter of 1967—the growth in output may have been somewhat greater, perhaps approaching 1 3/4 per cent; for it seems fairly certain, in the light of the movement of unemployment and industrial production that output must have recovered in the fourth quarter.

Perhaps the simplest first statement of what is needed to preserve the competitive advantage provided by devaluation is that, once the initial price-raising effect of devaluation is over, prices should not be allowed to rise faster here than they do, on average, in competing countries.

This chapter provides some detailed background material on the various categories of expenditure and the balance of payments.

In February 1967 the industrial production forecast was based on ‘present policies'; it then appeared that total national output in 1967 might rise only marginally, by 0.3 per cent, from 1966 to 1967; and that on the basis of previous experience, to such a small rise in gross domestic product would correspond a fall in industrial production of about ½ per cent.

Economic growth in the industrial countries was less in 1967 than in any year since 1958. Their industrial production rose by only about 2 per cent and their total output by about 3 per cent. The slowing down was most marked in North America and West Germany, but Japan was the only major industrial country to maintain (and indeed improve upon) the previous year's rate of industrial expansion or to achieve a significantly bigger increase in total national output.