§ I now turn to developments in the level of activity and employment. In the first half of 1970 economic activity was no higher than in the second half of 1969. Over the 12-month period, from the middle of 1969 to the middle of 1970, industrial production was almost flat. In the second half of last year, output picked up, though this was due in part to an unusually high rate of stock building which has probably not been maintained. The rate of growth of the national product between the first and second halves of the year was at an annual rate of about 3½ per cent., but it is almost certain that this has not been maintained in the early months of this year.
§ The upward trend of unemployment continued throughout last year and into the early months of this year. This can partly be explained by the relatively slow growth of output over the period, but it also reflects, I have no doubt, the increasing pressure which has been put on employers by rapidly rising wage costs, and which has forced them to economise and so to cut down their labour forces.
§ The pattern of expansion during 1970 was not ideal. In particular, there was a flattening out in the trend of private industrial investment and a further fall in the share of company profits in the total of domestic incomes. It is a striking fact that the share of company profits has fallen from 14½ per cent. in 1964 to about 10 per cent. in 1970. This is no doubt one important reason why industrial investment, on which our future prosperity depends, has been slowing down. Another feature of developments during 1970 was that the volume of imports rose fast in relation to total demand while the volume of exports rose much less; this of course tended to limit the growth of domestic output.