Chapter I. The Home Economy

Our forecast for the UK economy up to the end of 1982, which is summarised in table l, appears superficially very similar to that which we made in the last issue of this Review despite the intervening Budgetary measures and other events. We foresee GDP remaining roughly constant, at the level it held in the second half of last year, throughout the forecast period. Unemployment is expected to exceed 2½ million this year and to reach 3 million by the end of next year, while consumer price inflation falls slowly reaching 10½ per cent in the fourth quarter of this year and 8½ per cent by the fourth quarter of next. This similarity in aggregate behaviour, however, disguises some important changes in the distribution of incomes and expenditures and should not be interpreted as suggesting that events during the last three months, particularly the Budget, are without effect on the economy. A section of this chapter is devoted to a discussion of the expected consequences of the Budgetary changes introduced on 10 March.