Commentary

Quarterly Bulletin 1971 Q3
Published on 01 September 1971

Domestic output remained subdued during the three months from May to July, with which this Commentary is mainly concerned, and unemployment continued to rise. Earnings and prices were still increasing rapidly, although there seems to have been some slackening in the rate of growth of earnings and, more recently, perhaps also of prices. In July, the Chancellor of the Exchequer announced further measures to encourage consumer spending and investment; and the Confederation of British Industry called upon its members to limit price increases during the coming year. The balance of payments remained in large surplus on current account in the second quarter, and inflows from abroad, though smaller than in the previous three months, were again substantial. These inflows, together with some expansion in domestic credit, contributed to a further rise in the money stock. Extensive discussions have been taking place with banks and finance houses about the proposed changes in monetary controls, and the new arrangements are to come into force shortly.

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