This chapter begins with a narrative and review of economic policy in 1969; succeeding sections deal with output and the composition of demand; the balance of payments; and the regions.

This chapter contains the usual short-term forecast, up to mid-1971

By the third quarter of last year, output had fully recovered from its first quarter dip and the signs are that the resumption of growth was consolidated in the fourth quarter.

This chapter begins by reviewing the position of the economy in relation to the business cycle; it goes on to comment on the behaviour of unemployment, briefly considers the question of structural change, and then discusses, at greater length, the stance of policy. It concludes by extending the forecast outlook to 1972 and illustrates some economic possibilities for the medium term.

A year ago(1) it was expected that industrial production in 1969 would be some 4 per cent above the average for 1968. This was based on the general forecast for the whole economy, which on the basis of unchanged policies predicted a rise of 31 per cent in GDP. In the event, GDP rose some 2 per cent only and the advance in industrial activity was also consequently slower than expected, probably only about 2½ per cent (table 1). Within this general framework the rate of growth of manufacturing was some 3½ per cent, that of the electricity, gas, and water industries about 6½ per cent, but there were considerable setbacks in the fields of mining and construction. The production indices for these last fell 6½ and 2½ per cent respectively from 1968 to 1969.

Contrary to general expectations at the beginning of the year, real economic growth in the industrial countries in 1969 was not far below the recent average. Last February we predicted that the rise in their combined national outputs would be 4-4½ per cent. It now looks as though it may have been slightly above the upper limit of this range, owing in effect to the unforeseen rapidity of growth in France and, more especially, West Germany, where the increase appears to have been about 8½ per cent, compared with the official German forecast of 4½ per cent and our own figure of 5½ per cent.