In our view, the effect of the July measures will not be such as to produce an actual recession-a drop in national output-in 1967. The forecast at the centre of probability is still for a fractional rise in total output ; this would be consonant with a small fall in industrial production. There are still some expansionary forces in the economy-exports (for we expect no great slowing down in the rise in world trade) and public sector expenditure generally : public authorities' current expenditure, public sector housing and other public investment programmes. These will probably be strong enough to balance a decline in private investment (including private housing). Our tentative forecast is that manufacturing investment will be 6 per cent lower in 1967 than in 1966 ; this is a smaller fall than in 1962 or 1963. But, although the size of the fall is central to the discussion of the possible long-term growth rate, it is not a key element in the short-term forecast, since manufacturing investment is less than a quarter of total investment. Even if it were to fall as fast as in 1962, this would not substantially alter the prospect for national output in the year 1967.

World demand and production continued to expand strongly during the second quarter, though a little more slowly than before (table 14). Inflationary tendencies increased (chart 5).

Unemployment in the United Kingdom has now probably begun to rise. This note is based on an analysis of the figures during the last 10-15 years; its purpose is to show—mainly in chart form— some of the characteristics of unemployment in this country.

Three projections have been published in the last two years which give figures for the possible pattern of industrial production which might accompany certain growth-rates of total national output between 1964 and 1970, or 1964 and 1975. One of the problems in calculations of this kind is to find a sensible way of projecting the output of industries like the chemicals industry, which mainly supply other industries rather than the final consumer, and whose products have been gaining at the expense of traditional materials : the input of chemicals, per unit of output of the user industries, has been tending to rise.