Review of the quarter's economic trends [July 1979]

The UK economy continues to be depressed and is likely to remain so over the coming year. Preliminary estimates suggest that GDP fell in both the final quarter of 1978 and the first of 1979, and this pattern is likely to have persisted into the second quarter of this year. Indicators in the early months of 1979 were distorted by widespread industrial action, accounting in part for the 1% drop in GDP during the first quarter. However, though industrial production subsequently recovered rapidly, the level for the quarter as a whole remained below the average 1978 level, suggesting a zero or even negative underlying rate of growth. Recent falls in registered unemployment are therefore unlikely to be maintained and will probably be reversed given the conjunction of deflationary forces which the UK economy faces.