Organization for European Economic Cooperation: European Payments Union

Extract

The European Payments Union (EPU) was prolonged for a seventh year from July 1, 1956, without any alterations in the rules under which it had operated since August 1, 1955. The sixth annual report of EPU retraced the economic and financial developments in member countries during the fiscal year 1955–1956. It pointed out that economic activity had continued to expand, but in many countries demand had showed signs of growing rather faster than output, so that some inflationary pressures were felt in the form of rising prices and wages and of some weakening of individual balances of payments. The strongest advances in industrial output had occurred in France, with increases in west Germany, Italy, Belgium and the Netherlands being next in importance; there had been no growth in the United Kingdom. Most countries had witnessed a gradual exhaustion of spare productive capacity and very full employment, with man-power shortages in certain specific sectors. A significant development in most countries had been the increase in fixed capital formation. In France and the United Kingdom especially, one main reason for it had been the fact that full use of industrial capacity had already been approached and labor shortages were appearing. The rise in investment expenditure, in conjunction with a continued increase of consumer expenditure, particularly on durable goods, had added to inflationary pressures. In a number of countries wage demand had seemed in excess of the probable rise in productivity; and in several countries wage increases had been granted. Between the second quarter of 1955 and the second quarter of 1956, prices had risen in most countries by 4–6 percent, and by even more in Iceland and Turkey.