| Abstract: | Last year output rose nearly S per cent, the fastest rate of growth since 1973. But domestic demand rose even more rapidly and has continued to outpace supply this year. Consequently, the current account of the balance of payments has moved into deficit. One feature of the present boom, which distinguishes it from its predecessors, is that it is private sector demand which is the driving force — the direct contribution of the public sector has been far less marked, even minimal. In this Forecast Release we examine the behaviour of private spending and contrast the present boom with previous experience. We conclude that there are sound theoretical reasons why UK private saving should be reduced for a shoe period and that, if the reduction is temporary, the government's apparently relaxed attitude to the current account deficit is justified . |
