Review of the quarter's economic trends [November 1982]

Although circumstances are propitious for a modest expansion in output, business confidence is low and there is as yet no indication of the increase in investment necessary for a sustained longer-term recovery. Given the traumatic shocks of the past three years, industry may be slow to respond to relatively modest changes in the exchange rate and in the level of domestic demand, and more substantial pump-priming may be needed to make any impact on current unemployment levels. However, the high level of import propensity means that even a moderately-large growth in demand may not encourage significant growth in output and employment, and may instead lead to the familiar cycle of balance of payments problems, sterling depreciation and higher import prices, and renewed inflation. World economic trends are also considered in this brief paper.