The international environment 1993 Q4

• Recovery continues in North America and output in continental Europe has stabilised, but the recession in Japan may have some way to go.
• Output in the major six overseas economies is likely to grow by 1% this year and accelerate only gradually in 1994. Concerns about rising unemployment have intensified.
• Inflation remains very subdued with sharp falls in producer prices in several countries and falling commodity prices.
• The widening of fluctuation margins in the ERM has led to some narrowing of interest rate differentials. Despite further falls in nominal rates in October, real short-term interest rates remain high in continental Europe.
• Fiscal and monetary policies have eased further in Japan. The yen remains firm.

The international environment