^{page 7 note (1)} See Economic Trends, April 1973, page vii; and the article ‘Measuring GDP in 1972’ on page xxviii.

^{page 7 note (2)} The CSO has again suggested (see fn. (1)) that the output measure may be a more accurate indicator of the course of GDP in 1972 than the other two. In constructing our own ‘compromise’ estimate of GDP (in which we normally take a simple average of the three measures) we have on this occasion arbitrarily adjusted the result of such an averaging process by adding the following amounts to our normal ‘compromise’ estimate: 1972 I, +10; 1972 II, +25; 1972 III, +40; 1972 IV, +25; (£ million, 1963 prices). The whole of the adjustment has been put into our estimates of stockbuilding, which already contain, in the usual way, the discrepancy between ‘compromise’ and expenditure GDP.

^{page 8 note (1)} See National Institute Economic Review no. 62, November 1972, pages 17-18 for a fuller discussion of this problem.

^{page 9 note (1)} Owing to a recent change in our methods of forecasting private investment, this component of demand will no longer be included in our discussion of the ‘exogenous' items. More weight than previously is now given to past relationships between output and private industrial investment, though the length of the lags involved is such that the amount of ‘endogeneity’ (feedback from other elements of the forecast) is still small.

^{page 10 note (1)} This is on our own definition (see table 3) which excludes investment in the steel industry.

^{page 11 note (1)} House of Commons Weekly Hansard no. 926, col. 250.

^{page 11 note (2)} Public Expenditure to 1976-77, Cmnd 5178, HMSO 1972.

^{page 12 note (1)} See Financial Statement and Budget Report 1973-74, HMSO 1973.

^{page 15 note (1)} In terms of the DTI import unit value index, we expect the rise this year to be 171/2 per cent; on a current weighted balance of payments basis the increase is rather less—around 13 per cent. The prospects for world commodity prices are discussed on page 35.

^{page 16 note (1)} See National Institute Economic Review no. 63, February 1973, page 42 for a fuller discussion of this aspect of the forecast.

^{page 16 note (2)} Between the fourth quarters of 1962 and 1963 the rise was nearly 5 per cent.

^{page 16 note (3)} J. D. Whitley and G. D. N. Worswick, ‘The productivity effects of selective employment tax’, National Institute Economic Review no. 56, May 1971.

^{page 17 note (1)} Department of Employment Gazette, August 1971.

^{page 19 note (1)} Some details of this were published in the Sunday Times 15 April 1973.

^{page 19 note (2)} This is one reason for some differences in the figures. In addition, there are some conceptual differences in the measure ment of GDP and the allocation of the errors among the com ponents of demand—this affects the figures for stockbuilding in particular.

^{page 20 note (1)} National Institute Economic Review no. 62, November 1972, pages 12-13.

^{page 20 note (2)} There is a good deal of ambiguity in current discussions of these questions. Expressions such as ‘Budget deficit’ and ‘public sector deficit’ are used apparently synonymously, or the expression ‘borrowing requirement’ is used without indication whether or not local authorities and public corporations are to be inclu ded as well as central government. In any empirical context, this ambiguity must be removed, because, while there can be seen to be a rough correspondence between the various concepts, the correspondence, especially in year to year movements, is by no means exact.

^{page 20 note (3)} 28 February 1973.

^{page 20 note (4)} On this definition of the overseas sector, a deficit in the overseas sector means a surplus in the balance of payments on current account as seen from the side of the UK.

^{page 20 note (5)} Consider a spontaneous fall in F (i.e. a worsening of the payments balance). If this came from a fall in exports, one might expect it to cause direct increases in the personal, and company, sector deficits and, through a reduction of tax revenues, in the public sector deficit also. But if the fall in F came from a rise in imports on which there were substantial duties, then conceivably the rise in tariff revenue could more than offset the fall in other revenue already mentioned, leaving us with the opposite pre sumption about the direction of change in G.

^{page 21 note (1)} A deficit of the kind considered above would correspond to negative net acquisition.

^{page 21 note (2)} The residual error is not the full measure of the uncertainty of these figures. Each separate account has in it a large figure for ‘unidentified items’. If we add all the identified items, regardless of sign, we reach a total for 1971 of £5,412 million, the equivalent sum for the unidentified items is £2,613 million— very nearly half. It is not surprising that such figures are fre quently revised.

^{page 21 note (3)} The figures for net acquisition of financial assets were taken from the Blue Book, National Income and Expenditure, 1972, table 70 and Financial Statistics, April 1973, table 1. The latter shows revisions of the Blue Book figures right back to 1965 in some cases. The GNP figures are taken from Preliminary Estimates of National Income and Balance of Payments, 1967 to 1972, Cmnd 5261, HMSO March 1973.

^{page 22 note (1)} If the company sector is broken down into ‘industrial and commercial companies' and ‘financial companies’, it is found that both sub-sectors vary inversely with the public sector, but the association is stronger and the offset larger in the case of industrial and commercial companies.

^{page 23 note (1)} They are on a calendar year basis, and the official forecast for the public sector financial deficit is made at budget time on a financial year basis, but we may disregard this point without loss of substance.

^{page 24 note (1)} Assuming that GDP would still have been the same as actually recorded and forecast. In other words, assuming that the same stimulus would have come from elsewhere.

The figures have been adjusted, so far as is possible, on to a 1973-74 basis, so they may differ from figures given in successive Financial Statements.