The customary comment on the deficiencies of the data available for interpreting the recent past applies with more than usual force on this occasion. Not only are the three alternative national accounts estimates of GDP for the second quarter of the year in conflict, but in addition the value of some of the main indicators available for the construction of third quarter figures is also in some doubt : the figures of visible exports, visible imports, and industrial output in this period are all evidently less reliable as indications of economic activity than they usually are.

There was another substantial rise in output in industrial countries between the second and third quarters. But during the third quarter the deceleration of economic growth in the United States became more marked and showed signs of spreading to Canada and Western Europe. Developments have been broadly consistent with our August forecast and we still expect the aggregate national output of the industrial countries to be higher by about 4½ per cent in 1969 than it was in 1968 and to rise by another 3-4 per cent in 1970. It now looks as though we were rather too optimistic about prospects in the United States, where the increase is unlikely to exceed 3 per cent this year and may not reach 2 per cent in 1970. On the other hand growth in Western Europe is still tending to surpass expectations. Despite the Italian strikes it will probably be over 5½ per cent this year; and it may exceed 4½ per cent in 1970.

This article aims to assess the forecasts of the National Institute of Economic and Social Research with an emphasis upon their usefulness for arriving at policy recommendations. The forecasts that have been selected for consideration are those prepared in January or February over the period from 1959 to 1967. These are pre-budget forecasts, and are based on the assumption of no change in policy. They constitute a reasonably homogeneous group in that each forecast provides a prospective rate of change for GDP, in real terms, and its main constituents, from the final quarter of the previous year to the final quarter of the new year.

According to the trade returns, the advanced industrial economy of the United Kingdom is regularly supplied by the developing countries with aero-engines, scientific instruments, radar installations, and other technologically advanced products, plus a considerable range of more traditional but still sophisticated machinery and equipment. The explanation is that the compilers of our trade statistics have until recently failed to distinguish between goods genuinely imported from abroad and goods in British ownership re-imported after a period of use abroad. It has only been possible to guess at the magnitude of the trade involved.