§ With regard to the prospects for domestic demand, I will begin with consumers' expenditure. Taking into account the likely movements of wages and salaries, and other kinds of income, and the trend of prices, we have reason to expect another large increase in real personal income this year. The effect of this on consumer expenditure will be increased by some addition to consumer credit following the relaxations of credit restrictions made during the winter. I therefore expect a marked rise in total consumer expenditure in 1961 as compared with the average spending in 1960. By the end of 1961 it might well be running at a rate about 3½ per cent. higher in real terms than at the end of 1960. By comparison with the experience of most past years that would be a substantial increase.
§ I also expect current purchases by public authorities to rise at a rate of about 3 per cent. in real terms. This is much the same rate of increase as we have had each year over the last few years, and reflects mainly the steady expansion of such public services as education, health, and so on.
§ Coming to investment, it looks as if the trend of expansion will continue. The business forecasts collected by the Board of Trade suggest that in the manufacturing sector the demand for fixed capital investment in 1961 is likely to be about 30 per cent. above what it was in 1960, and in distribution and service industries about 10 per cent. I expect some rise in the investment demand of the public sector and a rise, also, in the demand of new housebuilding taking public and private building together. Taking into account the present considerable pressure of demand on the building industry, the increase in fixed investment in real terms looks like being about 7 per cent. between the end of 1960 and the end of 1961.
§ With rising consumption, private and public, and rising investment, it is clear that, even allowing for the probable 800 reduction in the rate of stock-building, there will be strong expansionary forces working on home demand.