Recent months have seen disturbed financial conditions, particularly in the United States. These are discussed in other parts of the Bulletin. It is not clear how far, if at all, such developments will adversely affect economic developments and prospects, with which this commentary is concerned.
Economic activity in North America continues to grow rapidly. Partly as a result, smaller industrial countries and developing countries (including some of the most heavily indebted) have seen a marked strengthening in their balance of payments, affording a measure of reassurance and relief Bank forecasts for the world economy are set out on page i 59. Interest rates and financial conditions in general are a source of particular uncertainty.
in the United Kingdom, allowing for the loss of coal production, activity has continued to pick up, bringing some increase in recorded employment. Domestic costs (the GDP deflator) and retail prices have been rising at about 5% a year, although industry's material costs have grown faster in the last year and pay settlements in industry (according to CBI sources) appear to have edged up in the course of the current round.
The changes in the financial positions of various sectors noted in the March Bulletin have to some extent been reversed: the personal sector's surplus has recovered while an increase in capital spending has contributed to a fall in the recently very large financial surplus of industrial and commercial companies.
Published on
01 June 1984
Economic commentary