The first section of this chapter provides a general appraisal of the state of the economy before the Budget, and of the likely course of national output for the rest of the year. The second section discusses the consequences for two crucial sectors-first, for employment and unemployment, and secondly, for the balance of payments. The third section gives a detailed description of the main items of national expenditure, and a justification of the assumptions made about their future course.

The prospects for world production and trade are much the same as they were in February. The outlook is rather brighter in the United States, where production is rising and investment plans have been increased, but, in spite of some rise in commodity prices, perhaps fractionally gloomier for the primary producing countries, many of whose imports have been falling. World trade should be in fair equilibrium this year without any major change in the size of most countries' export surpluses; but the equilibrium will be achieved at a lower overall growth rate than would be possible if reserves were larger and better distributed.

Two surveys of the future of British transport were published in March of this year: ‘The reshaping of British Railway’ and ‘The transport needs of Great Britain in the next twenty years’. The second of these sets out, in general terms, the relationship between transport needs and economic growth. This article, therefore, does not attempt to go over this ground again: its purpose is to provide background material to some of the issues raised by the two reports. It discusses, first—since this is the main point of current discussion—the social costs of the closures proposed. Secondly, it looks at the forecasts of the total demand for freight transport. Thirdly, it considers the particular problem the railways have, in that they are competing with transport owned and controlled by the user himself. Fourthly, the article sets out some comparisons of railway finances in various European countries. At the end of the article there is a collection of transport statistics.

One method of short-term economic forecasting is the use of indicators which normally change direction in advance of business activity as a whole. This method has been extensively developed over many years, with some success, by the National Bureau of Economic Research in the United States. In the present article we have explored the possibility of finding such a set of leading indicators for the British economy, with special reference to post-war movements.