Economic commentary

• Share prices have fallen sharply on the world's major stock markets since mid-October. The Federal Reserve indicated its readiness to increase liquidity; interest rates have fallen, including cuts in UK base rates to 9%. The dollar weakened towards the end of the month.
  
  
• Until the fall in share prices, there had been an increase in long-term interest rates among the major overseas countries, partly reflecting a rise in inflation. Some firming of short-term rates was associated with tighter monetary conditions.
  
  
• Growth remained moderate overall among the major overseas countries in the first half with robust growth in the United States, Canada and Japan and weak growth in continental Europe.
  
  
• The United Kingdom is one of the fastest growing economies among the major industrial countries. GDP rose by almost 4% in the year to the second quarter.
  
  
• The growth of manufacturing output has been particularly strong and has been accompanied by higher productivity. There was a further rise in capacity utilisation, according to the latest CBI survey.
  
  
• In the second quarter, all elements of private demand rose; consumer spending rose further in the third quarter. The strength of demand contributed to a deterioration in the visible trade deficit in the second and third quarters.

Economic commentary