Welsh Journals

9. WALES IN 1988: AN ECONOMIC SURYEYi Dennis Thomas THE BRITISH EXPERIENCE In our survey of 1987 it was stated that forecasting the performance of the British economy in 1988 was a particularly hazardous exercise. In the event, the year did indeed prove to be, in the words of the National Institute of Economic and Social Research, 'not a good one for macroeconomic forecasters'. The much publicized mistakes made in the official forecasts by the Treasury were reflected in those of most independent forecasters. The major discrepancies involved the under- estimation of the growth of output and the significant under-prediction of the size of the deficit in the current account of the balance of payments. The annual growth rate of GDP in 1988 has been estimated as around 4.5 per cent, as a continuing rise in consumer spending, particularly on durable goods, of some 6.5 per cent was reinforced in the latter part of the year by a rapid increase in investment demand. Manufacturing output is estimated to have risen by about 7 per cent over 1988, with a similar increase in manufacturing productivity. The strong rise in consumer demand was to a large extent fuelled by continuing consumer credit expansion as personal sector savings fell to only 2 per cent of total personal incomes. The number of employees in employment in Great Britain is provisionally estimated to have risen by nearly 500,000 between December 1987 and December 1988, with the figures for manufacturing employees showing an increase of some 37,000. Official unemployment figures for Great Britain, seasonally adjusted and consistent with current coverage, fell below 2 million in November 1988 for the first time since April 1981 and stood at 1,928,300 in