The UK economy [April 1979]

Gross Domestic Product in the United Kingdom increased by close on 3% in 1978. This growth, however, was largely concentrated in the first half of the year, the level of activity showing little change in the third and fourth quarters. Consumer expenditure was the most buoyant component of aggregate demand, increasing by 5.5% in volume terms over its 1977 level. This buoyancy reflected the rapid growth in real personal disposable income which took place last year following three successive years of decline. Purchases of consumer durables, deferred during these preceding years, recovered strongly, leading in turn to a rapid rise in imports. Exports by contrast performed poorly, rising at a considerably slower rate than in the preceding two years. The current account of the balance of payments remained marginally in surplus for the year as a whole, but at a level considerably below official predictions. Additional observations about the UK's economic prospects are also provided in this brief paper