Economic commentary

• The fall in oil prices has strengthened the down ward pressures on inflation among the major industrial countries.
• Lower oil prices have improved the prospects for a resumption of economic growth, although there was a slowdown in the growth of industrial production among industrial countries in the first quarter.
• The prospects for a more sustained period of growth have also been enhanced by the fall in the dollar and in interest rates in early 1986. But some risks remain, including protectionist pressures.
• In the United Kingdom there has been a slowdown in the growth of output since the second quarter of 1985 and there has been a further rise in unemployment since the end of the year. But domestic spending continues to rise.
• The growth of manufacturing productivity has slowed, reflecting slower growth of output. Unit wage costs continue to rise faster than those of our competitors.
• There is likely to be a strong increase in real earnings this year, with the increase in retail prices falling to 2¾% at an annual rate in May and underlying earnings continuing to rise at 7½%.
• The growth of liquidity remains strong, as the private sector continues to adjust to the improved availability of credit following the liberalisation of the financial system.

Economic commentary