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.

Britain's poor export performance during the course of last year was the more surprising because, for the first time for a number of years, the change in the area pattern of world trade was not unfavourable to her. Sterling area countries take about 40 per cent of Britain's exports of manufactures, but only about 10 per cent of those of the other main exporters of manufactures. From 1954 to 1959 overseas sterling area imports rose more slowly than world imports, and Britain lost from this. But last year sterling area imports rose relatively fast, and Britain should have gained.

The trouble was in 1960 that Britain's share in these imports fell much faster than before; she lost nearly 5 per cent of the market—this was more than twice as big a loss as the average from 1954 to 1959. This fall in share in 1960 was not big enough to stop Britain's exports of manufactures to the overseas sterling area from rising altogether; but it meant that they went up only 6 per cent in value, whereas those of her eight main competitors rose about 28 per cent.

Charts 1 and 2 look at this matter in longer perspective. The main point of the charts is simply this : it is Britain's share in sterling area markets which has fallen steeply since 1954 : her share in non-sterling area markets had, until 1960, hardly changed.

It has often been asserted that Britain is one of the most heavily taxed countries in the world. That assertion is examined in this note by comparing the weight of taxation and compulsory social security contributions in Britain with that in other countries. The comparison is made in broad terms with about twenty countries and in more detail with Australia, Western Germany, Ireland, Sweden and the United States. But even the detailed comparison is necessarily a coarse one. Tax systems almost everywhere are immensely complicated and only a few aspects of the systems are examined here.

Taxation in this country does not appear to be exceptionally heavy. The total burden—the proportion of the country's income which is taken in tax—is quite near to the European average. Further, the British division of tax between direct taxes on households, taxes on corporations and indirect taxes, is closer to the European average than that of any other European country. Those earning more than about £10,000 a year are more heavily taxed in Britain than in the other countries examined in detail but less than one-tenth of one per cent of the working population are in this income group, so this is hardly a sufficient ground for the general complaint of high taxation. At incomes between £2,000 and £10,000 a year, Sweden takes more in tax than Britain; Australia and Ireland take about the same; and Western Germany and the United States take less. Below £2,000 a year Western Germany and Sweden have very much higher rates than the other countries.