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Chapter I. The Home Economy

Published online by Cambridge University Press:  26 March 2020

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Extract

Our view of the short-term prospects for the domestic economy has worsened markedly since May. This is only in part because of the Budget of 12 June: indeed it is important to bear in mind, if comparisons are made with the May forecasts, that we had allowed for public expenditure cuts for 1979/80 on the scale which has now been announced and we also built in the indexation of both personal tax allowances and specific indirect taxes and duties. Thus, so far as the change in the outlook for the current financial year is concerned, the Budget effects are broadly limited to the move to a uniform VAT rate of 15 per cent together with the cuts in personal income tax rates. For 1980/81, we have reduced our public expenditure volume forecast substantially from the figures given in May. The other major factor tending to alter the outlook was the unexpectedly rapid growth this year of imports.

Type
Articles
Information
National Institute Economic Review , Volume 89 , August 1979 , pp. 11 - 23
Copyright
Copyright © 1979 National Institute of Economic and Social Research

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References

Note (1) page 14 C. V. Brown and E. Levin, ‘The effects of income tax on overtime: the results of a national survey’, Economic Journal, December 1974. For a brief survey of the equally ambiguous international evidence, see Joseph A. Pechman, ‘Taxation in the United Kingdom’, paper presented to the Brookings— NIESR conference on the UK economy; Washington, May 1979.

Note (1) page 16 W. W. Daniel, ‘Wage determination in industry’, PEP, Vol. XLII, No. 563. This is a report on a survey conducted in Autumn 1975.

Note (1) page 20 This is the IMF weighted effective index, which differs slightly in its base from the Bank of England's index.