§ Conditions for trade in the world as a whole look favourable. In North America a strong recovery has been in progress for some time, and although it has slowed down in recent months there is reason to expect that it will continue. In Western Europe there has also been some slowing down in the last twelve months, but the expectation is that there will be a definite expansion in the months to come. The primary producing countries, which have not been well placed in the last year or so, may hope to do rather better this year. Taking the picture as a whole, we can reasonably expect a substantial growth of demand in the world for the types of goods which we export. Our sales abroad should increase considerably if we keep our prices right and if we have the resources to make, and the will to sell, the goods wanted. The prospects for invisible exports are slightly better. This is a welcome change.
§ But in order to ensure that we do not fail over exports, we have to examine the other calls on our resources. First, fixed investment. Here, the trends are not uniform. The large public sector investment programmes, an account of which was presented in the White Paper of last October, are planned to rise by 5 per cent. in real terms between the financial years 1961–62 and 1962–63. In the private sector, industries concerned with distribution and services, according to Board of Trade forecasts, show a rise of 8 per cent. in real terms between 1961 and 1962.
§ Private investment in housing is also expected to rise a little. Only in investment by manufacturing industry is some reduction expected. The figures for the last quarter of 1961 show that this is already in progress, and a further gradual reduction seems probable. But it should also be remembered that the level of 965 manufacturing investment has been high over the past two years.
§ At its peak last autumn it was one third higher, in real terms, than eighteen months earlier. Even in twelve months' time this kind of investment should remain above the level reached in 1960, which was itself higher than in any previous year. Putting all these figures together, we expect total investment in real terms to rise slightly in the course of 1962.
§ I am now dealing with various claims on demand. Expenditure on goods and services for current purposes by the Government and other public authorities will rise by about 3 per cent. this year. We must take account of the probability that later in the year there will be renewed investment in stocks. The expansion in economic activity, for all these reasons, will add to consumers' incomes. This should lead to a substantial rise in personal spending in the course of the year. There is also good reason to expect increased buying of consumer durables on hire purchase. By this time next year total personal spending may well be up by 4 per cent. in real terms—a very large rise in relation to the average experience of recent years.
§ In total, therefore, the increase in home demand over the next twelve months looks like being substantial. Since it is so necessary to keep the way clear for the growth of exports, this must be carefully watched. By the end of 1962—and it is no good our trying to avoid facing this possibility—the cumulative effect of all the factors I have mentioned could result in too great a call on our resources if we do not keep the balance right.
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- INCOMES POLICY 482 words c967
- EXPORT INCENTIVES 312 words cc967-8
- GROWTH 112 words