In 1958, for the second time since the war, Britain experienced a slight decline in demand and production. During the year the Government, whose policies for three years had aimed at checking demand so as to stop inflation, began to take steps to re-expand demand. These measures are still taking effect.

The purpose of this Review is to analyse the effects of the decline in demand on the economy, and to assess the prospects and problems of recovery.

Three new commodity price indices have been compiled by the National Institute and appear in table 20 of the Statistical Appendix (page 50). Their purpose is to give an early (but necessarily rough) indication of current price movements in three trade flows:

1. (a) in United Kingdom imports, with sub-indices for food and tobacco, industrial materials and fuel,

2. (b) in the exports of the overseas sterling area,

3. (c) in the exports of primary producing countries in total.

In some post-war years, stock changes., through their effect on the level of imports, have been a major cause of balance of payments fluctuations. They have been important again during the past year (see page 5). From statistics of supplies, disposals and stocks of individual commodities, we have therefore tried to separate changes in imports due directly to stock changes from those due to changes in the actual usage of imported commodities. The resulting figures of stock changes are given in table 11 of the Statistical Appendix, where they can be compared with figures of imports.