Sterling has been less strong since the middle of January, when it became clear that the negotiations for the entry of the United Kingdom into the European Economic Community were likely to fail, but the rate against the US. dollar has not fallen much. At home, the economy has lacked buoyancy. Industrial output, which was rising during the spring and early summer of last year, has since fallen back, and unemployment has grown month by month. By February, after weeks of severe weather, the total for Great Britain had reached 878,000. But neither output nor employment has yet had time to respond more than very partially to the various official measures of encouragement which have been announced during the past six months. The measures taken during September, October and November were discussed in the December issue of this Bulletin. They included the removal of credit restrictions, a number of important tax concessions, and an increase in public spending on capital account. Since then, the Chancellor of the Exchequer has reduced the top rate of purchase tax from 45% to 25%; Bank Rate has been reduced from 4½% to 4%; and social benefits have been, or are soon to be, increased, so helping to raise personal consumption.
Commentary