Economic commentary

• GNP growth in the major overseas economies quickened in the first quarter, but remained below its recent peak.
  
  
• In the first quarter, external demand made a large positive contribution to growth in the G3 economies, resulting in some trade deficit reduction in the United States but in no overall narrowing of imbalances.
  
  
• The UK current account is responding to slower demand growth at home relative to that in our major trading partners.
  
  
• Domestic demand and output growth are now coming more into balance, though the adjustment process has been uneven between industries, regions and demographic groups.
  
  
• The continuing strength of fixed investment, though not unwelcome, is surprising in the light of the company sector' s financial deficit which remains at an unprecedented level.
  
  
• Non-oil commodity prices remain weak; but oil prices have risen sharply as a result of OPEC cut-backs in production and mounting political tension in the Gulf.
  
  
• There is broad agreement between various measures that underlying UK inflation is some 6%-6½% per annum, and has been rising, whereas that of our main trading partners is substantially lower and has been falling.

Economic commentary