bluuebunny/crossref_metadata_2025 huggingface dataset:
WORLD OUTLOOK
Authors: Dicks Geoffrey
Published: January 2008

Over the last 12 months industrial production in the OECD area has risen by 8–9 per cent, only slightly less rapidly than in the first year of recovery from the OPEC 1 oil crisis. Much of the growth in output stems from a very rapid expansion in North America although, in the second half of 1983, output in Europe and Japan began to accelerate. We expect the recovery to be maintained during 1984 with some convergence of growth rates. For the year as a whole we are now forecasting 61/2 per cent growth of industrial production, 33/4 per cent for total GNP. By the end of 1983 the long‐standing reduction in inflation had run its course and OECD consumer prices were about 5 per cent higher than a year earlier. Within the area some countries, such as France and Italy, were still reducing inflation, but this was offset by the US where inflation has been rising slowly since the summer. We expect these trends to continue in 1984, i.e. stable inflation in the OECD but accelerating prices in the US, producing in each case about 5 per cent inflation. In 1985 we are now forecasting a slowdown in the world economy. This is expected to be centred on the United States, where the problem of the Federal Budget remains to be tackled. By the time of the Presidential election the US economy will have registered two years of relatively rapid growth. This is likely to be producing upward pressure on prices and interest rates and, as a result, a pause in 1985 in the growth of output. In Europe and Japan, where output has grown more slowly, we expect the recovery to be sustained in the medium term.
WORLD OUTLOOK
Authors: Dicks Geoffrey
Published: January 2008

Unless the international debt situation or the crisis in the US domestic financial system worsens or there is a further lurch into protectionism, we expect world output to advance more rapidly over the next 2 months than it has over the last year. We argued in May that the world recovery was pausing, just as it did in 1977, and that conditions were falling into place for a pick‐up in output. The requirements were seen as a lower dollar, to improve US competitiveness and to alleviate protectionist pressures, and stronger domestic demand elsewhere, to offset the resulting loss of US markets. Since then the case for a lower dollar has been recognised by the Group of Five Finance Ministers, interest rates have fallen and, at the G5 meeting, West Germany and Japan tentatively revealed a further modest stimulus. Output optimism is underpinned by the fall in world inflation to levels not seen since the early 1970s which, our forecast suggests, will be consolidated over the next 12 months. This reflects falling real oil and non‐oil Commodity prices and decelerating earnings, which makes a further tightening of policy unlikely. In these circumstances the prospects for output are improving and over the next 12 months we forecast an increase in OECD output of 4per cent.
Adjusting to the Oil Price Fall
Authors: BUDD ALAN , BREEDON FRANCIS , DICKS GEOFFREY
Published: January 2008

In his Budget speech last March Mr. Lawson said “If we can survive unscathed the loss of half our North Sea oil revenues in less than 25 weeks, then the prospective loss of the other half over the remainder of the next 25 years should not cause us undue concern.” In this Viewpoint we ask whether Mr. Lawson's optimism was premature. Although we continue to believe that the fall in oil prices will have favourable effects on the UK economy, there will be problems of adjustment which could be painful. We ask the following questions: (a) What adjustment to the balance of payments is needed to compensate for the fall in oil prices? (b) How will the adjustment occur? (c) How far can the recent weakness of sterling be explained by the fall in oil prices, or is there a more alarming explanation?
WORLD OUTLOOK
Authors: Dicks Geoffrey , Breedon Francis
Published: January 2008

The slowdown in the world economy, which followed last year's oil price collapse and which awakened fears that the world was on the threshold of a new recession, is coming to an end. Output growth in the first half of the year was stronger than we had previously expected and a gentle acceleration is forecast over the next eighteen months. In contrast to this improvement on output, there has been little or no progress on the major problems of the world economy, including the USA's twin structural deficits, budget and trade, and the international debt crisis. Moreover, with the US facing elections in just over a year's time, no economic initiative is likely until 1989. Hence the prevailing view that the US and world economies will “muddle through” for another year. But in 1989 a new US administration is likely to face up to the trade and budget imbalances and many US forecasters believe that the required fiscal tightening will lead to recession. As we explain below, this is not our view and the forecast embodies steady 3 per cent growth in the world economy over the medium term. Inflation has now passed the low point brought about by the oil price collapse. On our forecast of output, inflation is expected to remain close to its present underlying rate of 4 per cent.
The Nominal Framework for Economic Policy
Authors: BUDD ALAN , DICKS GEOFFREY
Published: January 2008

The next Budget will almost certainly be the last one before a General Election. Despite the temptations to make electorally attractive cuts in income tax or increases in public spending, we believe the opportunity should be taken to re‐affirm the government's intention to move steadily towards price stability. This is particularly important at a time when our exceptionally high real interest rates may reflect fears about a future change in policy. We provide a nominal framework which extends the Medium Term Financial Strategy to 1992–3. Given the buoyancy of revenue and the likely growth of money GDP next year, we argue that the PSBR should be no higher than £6bn next year. There is a good case for keeping it at this year's expected level of £5bn.
SURPLUSES AND DEFICITS
Authors: Dicks Geoffrey
Published: January 2008

The US economy has twin deficits: internal (the budget deficit) and external (the current account). In sharp contrast, the UK combines a PSBR surplus with a rising current account deficit. Japan and West Germany both enjoy large current surpluses, though in Japan the public sector deficit is narrowing whereas in Germany it is rising. Remarkably, as Figure 1 shows, the present position on the public sector and overseas balances in each of the three major OECD economies and the UK is quite different. Japan is the mirror image of the US: the budget and overseas balances have been moving in the direction of surplus ‐ private sector savings have been more stable. For the UK and West Germany (though again as images of one another) it is movements in private sector savings which have driven the current account. How has this come about?
Exchange Rate Policy: Is this where we came in?
Authors: BUDD ALAN
Published: January 2008

In the second issue of Economic Outlook (April 1977) we published an article entitled “Why the exchange rate must be set free”. In this Viewpoint we recall the arguments we presented then and consider their relevance to the present debate about exchange rate policy. We conclude that circumstances now are rather different from those in 1977 and that the choice between monetary targeting and exchange rate targeting is not as simple as it appeared then. Nevertheless we do believe that in the circumstances of recent month it was correct to let the exchange rate rise above its unofficial “ceiling” of DM3 rather than to pursue a specific exchange rate target.
Introducing the supply side into the LBS Model
Authors: HOLLY SEAN
Published: January 2008

This Briefing Paper describes a new version of the London Business School model, which incorporates our most recent research on the supply side. The changes reflect the desire to improve the specification of the supply‐side of the model, and to capture the effects of taxes on the incentives to save, invest and to work, while still retaining the basic features of the income‐expenditure framework. The main features of the new model are:

‐ Gross domestic product is determined as the sum of the outputs of five sectors. Previously GDP was determined by the demand side as the sum of the expenditure components.

‐ Domestic demand for the output of the private sector depends on domestic absorption and on the price of this output relative to import prices. Overseas demand for exports depends on world economic activity and on the price of exports relative to the world price of exports.

‐ Supply depends on the capital stock, real unit labour costs and real raw material prices. In the short run, input prices are allowed to affect the mix between goods which are exported and those which are supplied to the domestic market. In the long run, however, the mix depends only on the price of exports relative to the price of domestically supplied goods (i.e., relative profitability).

‐ In the short run, disequilibrium in the goods market is reflected in adjustments to prices, inventories and the external balance.

‐ Since gross domestic product is determined by summing the output of each sector, output decisions are reconciled with expenditure decisions by making imports the difference between final expenditure and aggregate supply.

‐ In the long run, increases in government expenditure crowd out private expenditure, but the effect takes several years to come through.

‐ A cut in corporation taxes which is not financed by higher taxes elsewhere boosts the supply side by raising investment and the capital stock, but not by enough to raise revenues sufficiently to pay for the tax cut. Private sector saving increases but not by enough to fund higher public sector borrowing, so the current account goes into deficit.

‐ In the short run, both supply and demand factors influence economic activity; in the long run, the path of the economy depends only on population growth, capital accumulation and technical progress.
The MTFS or the EMS: Which Way for Credible Monetary Policy?
Authors: CURRIE DAVID , DICKS GEOFFREY
Published: January 2008

Since the latter part of 1988, the primary policy objective has been to head off a rise to double digit inflation. To this end, interest rates have been raised from 7112 per cent to 14per cent, while the public sector is running a large fiscal surplus. Despite this apparently very tight policy stance, policy is deficient in a crucial respect: it lacks credibility. The all too public divisions within government have weakened the efficacy of monetary policy, especially in financial markets. The ongoing uncertainty over who is in charge of the conduct of policy ‐ No. 10 or No. 11 ‐ further undermines confidence. The most urgent priority must be to reassert clear priorities and guidelines.

In this Viewpoint, we consider how best to restore the credibility of monetary policy. There are two main possibilities: first, to reassert the Medium Term Financial Strategy (MTFS) in an appropriate form; or to join the (Exchange Rate Mechanism of the) European Monetary System (EMS). We argue that it will be very hard to derive credibility benefits from a reassertion of the MTFS: because of the inflation record of the past decade and the twists and turns of past versions of the MTFS, a mere restatement will not resolve the uncertainties that result from known differences within the government. In particular, any restatement will rely on discretion and judgement in its implementation and this will weaken its beneficial effects on expectations.

Instead we argue that entry into the EMS offers a tougher and more credible commitment for monetary policy. The Chancellor has been pushed to rule out UK entry until the second half of 1990 at the earliest, but the government should make a virtue of this by announcing a firm dale for entry next year. In the interim, it should encourage a debate about the appropriate rate for entry, a debate which will increasingly guide the foreign exchange market. The government should make it clear that in choosing this rate it will do so with the commitment to low inflation very much in mind, favouring a high exchange rate. Once in the EMS, the government should rule out the possibility of devaluing the pound in an EMS realignment. This provides a firm non‐ discretionary anchor for both monetary policy and inflation expectations. With this commitment, the principal gain from EMS entry will be establishing a regime of low inflation for the next decade: in this, choice of the exchange rate will be less crucial than the fact of entry.
WORLD OUTLOOK
Authors: Allen Chris , Burrell Andrew , Mitsui Tadasu , Dicks Geoffrey
Published: January 2008

The rise in the oil price since the Iraqi invasion of Kuwait in early August does not radically alter prospects for the world economy; rather it exacerbates existing trends. The US economy was, in any case, heading towards recession and a sizeable overshoot of its budget deficit targets. Japan, especially, but also continental Europe had still not reached the peak of the economic cycle so that inflation and interest rates were still rising. While the higher oil price adds to costs and prices in all countries, the policy response is unlikely to be unborn. In the US the adverse effects on output are being emphasized while elsewhere the inflationary implications are to the fore. In Japan, where acute labour shortages are emerging, the monetary authorities have already raised interest rates and we expect a similar response from the Bunds bank In the US such a move is unlikely; indeed once an agreement on the budget deficit is obtained between President and Congress, we would effect the Federal Reserve to cut interest rates. Despite this view on policy, the forecast offers little prospect of the US avoiding a pronounced slowdown and takes a gloomy view on US growth in the medium term. In Japan and Germany on the other hand the short‐term inflation outlook appears containable and growth prospects over the medium term robust. The central forecast is based on a $25 oil price; we explore in a simulation what might happen if the price rose to $45 a barrel for a limited period.
Options for ERM Entry
Authors: CURRIE DAVID , DICKS GEOFFREY
Published: January 2008

After years of being blocked, UK entry to the Exchange Rate Mechanism now looks very probable either later this year or early next. But if the issue of entry is largely settled, the form of entry remains open. We examine the different dimensions of this question, and consider five separate options for entry. We consider two strategies driven largely by political considerations, but reject them as too high risk. We also reject the ‘deep‐discount’ option as being far too inflationary. Instead we argue for entry at a relatively high exchange rate in line with or slightly above the current market rate. With entry next spring, we would favour a narrow band. But if entry is in the autumn, entry in the lower half of a broad band is more appropriate, leaving greater room for manoeuvre in interest rates. But a move to narrow bands in the course of next year would then be required to give maximum anti‐inflation benefits. On this strategy ERM entry will provide appreciable benefits in bringing down inflation, but it will not be costless: as our forecast suggests, the economy will undergo several years of depressed growth of output. But this should lay the basis for steady growth combined with low inflation from 1993 onwards.
Briefing Paper: The Interdependence of Fiscal and Monetary Policy under Economic and Monetary Union
Authors: LEVINE PAUL
Published: January 2008

This article explores the implications of Economic and Monetary Union (EMU) for the conduct of fiscal policy. Under EMU, where the European Central Bank is successful in controlling inflation, the loss of seigniorage revenues causes a potential problem for public sector deficits. To prevent the debt‐income ratio from spiralling upwards, a primary budget surplus is ultimately required. EMU has usually been considered as a strong central monetary authority which forces fiscal discipline on lax national governments. But this is not the only possibility. Because the debt ratio can be reduced by surprise inflation, the price expectations of the private sector are important. Once these are taken into account, EMU can be examined in a ‘game’ framework in which the reputation of the authorities and the existence or otherwise of cooperation between the fiscal and monetary authorities becomes a critical factor.

The paper finds that where the authorities enjoy reputation and cooperate, a one‐off reduction in public spending will lead to a permanent decline in the real interest rate and crowd in extra private spending (consumption and investment). Without reputation the cut in government spending has to be sustained. Where there is neither reputation nor cooperation, the outcome depends on the structure of the European economy and whether fiscal policy can effect the terms of trade between countries. If the terms of trade remain unchanged, the outturn is similar to the case of cooperation without reputation, but where the terms of trade can be improved in one country, there is no incentive to cut public spending. In this case the outturn is higher inflation with private spending crowded out.
Inconsistencies in Macroeconomic Data
Authors: EGGINTON DON
Published: January 2008

In recent years large inconsistencies have appeared in the national accounts, causing a number of problems for forecasters and policy‐makers. This paper briefly summarizes these problems and discusses some of the responses available to improve the statistics. It focuses on a simple mathematical procedure which can provide coherent accounts even when the reliability of the data which is being balanced is unknown. Some of the main results of applying such a procedure are then outlined and these are compared with the CSO's recent balanced accounts exercise. The paper concludes that, although the broad macroeconomic picture for real (as opposed to financial) variables is little changed by balancing, continued balancing exercises would be worthwhile because they reduce the uncertainty surrounding forecasts and hence policy‐making.
Economic Outlook 1991–1995: London Business School with Gower Publishing: Forecast Release: ECONOMIC POLICY AFTER THE STERLING DEBACLE
Authors: Currie David , Dicks Geoffrey
Published: January 2008

Now that sterling has withdrawn front the ERM and is once again in free float, the Government must decide on the next stage of policy. Should it seek to rejoin the ERM as quickly as possible or should it prolong the float? We argue that, whichever way the Government moves, devaluation has undone progress on inflation arid irreversibly damaged the credibility of the UK commitment to the ERM ‐ the credibility of the ERM itself has also been damaged, perhaps irretrievably. In these circumstances, the Government should accept the verdict of the foreign exchanges arid switch the focus of its policy to ending the recession by setting interest rates in accordance with the needs of domestic recovery. The inflation costs of such a move should be small, at least initially, and the battle to reduce inflation can be rejoined in earnest arid the pound returned to the ERM when Germany has itself sorted out its unification problems. On the ERM we argue that it mist move either forwards to EMU or back to the crawling peg system of exchange rates that characterised the first half of the 1960s: it cannot remain in its current limbo.
The Economic Effects Of The End Of The Cold War
Authors: SMITH RON
Published: January 2008

The end of the Cold War and the dissolution of the Warsaw Pact have raised a host of new questions. Will there be a Peace Dividend: more security and more money to spend on other things, or a Peace Penalty: mass unemployment in the arms industry and financial difficulty for many leading high‐technology firms? Will there even be Peace at all or will there be instead a new ‘Second World War’ as the old Second World of the Centrally Planned Economies relapses into internecine nationalist conflict? Many of these questions are unanswerable, but this paper reviews what is known about the likely trend in military spending and its economic impact on Western Economies. It examines the strategic context which will determine the size of the reductions in military expenditure; the policy response which will determine how governments adjust their budgetary stance to reduced military outlays; and the macroeconomic and industrial impact of these changes.
The London Business School with Gower Publishing
Authors: Currie David , Dicks Geoffrey
Published: January 2008

In October we forecast 1 per cent output growth in 1993 accompanied by little change in retail price inflation, an increase in unemployment to 3.2 million by the end of the year and a £20bn deficit on the current account of the balance of payments. Since then we have revised our view of the international outlook and the Chancellor has made his Autumn Statement. There are also some hopeful signs in the latest data on retail sales, manufactured exports and the money supply that demand may be picking up both domestically and overseas. How do these developments affect our short‐term forecast? The simple answer is very little: the outlook on output and inflation in 1993 is barely changed since October (Table I).

We have lowered our forecasts for world inflation and for German interest rates which means that the pound can be held steady against the DM at lower UK interest rates and that the inflationary consequences of devaluation, though significant, are slightly less over the medium term than we made out in October. There is one revision of major significance, and that relates to the PSBR, which is now likely to reach f45bn in 1993‐4, more than 7per cent of nominal GDP. The change is not on the spending side ‐ the Autumn Statement confirmed existing expenditure plans ‐ but on revenues, notably corporate taxes and tares 011 spending, which have fallen far more quickly than we envisaged. This, in combination with a projected near‐2'per cent of GDP deficit on the balance of payments, poses a difficult medium‐term policy dilemma. To escape from the twin deficits requires either deflation of demand, which conflicts with the Government's new‐found commitment to growth, or a more buoyant economy to boost tax revenues and a competitive pound to underpin export‐led growth. Of the two the latter is self‐evidently more inflationary. This highlights the policy dilemma: at some stage the Government may have to choose between reducing the deficits and its 1–4 per cent inflation target or sacrifice its commitment to growth.
The London Business School with Gower Publishing
Authors: Dicks Geoffrey
Published: January 2008

In the last six months manufacturing output has risen at a rate in excess of 10 per cent while inflation has dropped to 1.2 per cent, its lowest level in a generation. Unemployment has fallen for five successive months. None of these developments was forecast ‐ either by us or, so far as we are aware, by anyone else. How is that the British economy continues to surprise all the forecasters and will it continue to do so? We examine the shift in the forecast consensus over the last year and ask whether the revisions will have to continue. Our conclusion is that some of the most recent optimism is misplaced and that there remain setbacks ahead both in terms of output arid inflation. Nevertheless, it would appear that the risks are on the right side, that if anything output is likely to rise faster and prices more slowly than the current Consensus.
The London Business School with Gower Publishing
Authors: Burrell Andrew
Published: January 2008

Last year earnings growth fell below the lowest rates of increase experienced in the 1980s. At the time this was seen as primarily the result of the deflationary squeeze produced by ERM membership. It was too early to proclaim a new era of responsible wage bargaining until the recovery had occurred. Since then not only has sterling lost its E m anchor, and suffered a sharp depreciation, but an upswing in activity has also been established. However, in spite of the revival in potential inflationary forces, earnings growth has continued to decelerate in 1993. It is clear that the last recession has had a more pronounced effect on nominal wages than its predecessor. In terms of real wages, however, there appears to have been little change, implying that the fall in nominal wages is due solely to lower price inflation. The important question for the present pay round is how will the labour market respond to the recovery? Have the supply‐side policies pursued in the 1980s had a decisive effect, allowing the UK to make the transition to low, stable inflation rates in the 1990s? Or will there be a reversion to traditional inflationary practices?
The London Business School with Gover Publishing
Authors: Dicks Geoffrey
Published: January 2008

The world economy is in poor shape. OECD industrial production fell 0.5per cent in both 1991 and 1992 arid though it may now have stopped falling it is still, on our estimates, below year‐earlier levels. The US recovery continues to disappoint; recession persists in Japan and Europe; inflationary pressures, already weak, are waning. Next month's UK forecast would normally be based on the world forecast published in June's International Economic Outlook, when we were looking for G7 output to rise 1.2 per cent this year, 2.5 per cent next. But this now looks on the high side and although a detailed revision to the world forecast mist wait until the December IEO, as at1 input to the UK forecast we are shading our G7 growth forecasts ‐ to I per cent this year and 2.25 per cent in 1994. Similar downward revisions are also in train at the OECD arid IMF, according to recent press reports. The more sluggish output performance is already having mi impact on the oil price, which has fallen below £16 a barrel. Together, these developments imply lower world inflation and, particularly in post‐ERM Europe, a faster easing of monetary policy than we had allowed for in June.
UK Economic Prospects and Policy Dilemmas
Authors: CURRIE DAVID , DICKS GEOFFREY
Published: January 2008

Our current forecast, largely unchanged from that published in the October 1992 Economic Outlook, is for a gradual recovery in economic activity during 1993, gathering pace in the course of the year. Unemployment continues to rise through the year, and inflation remains subdued. The main risk to the forecast lies in the possibility that a continued decline in property values may check reviving confidence and lead the banks to restrict lending.

The principal policy dilemma lies in the very high level of public sector borrowing, likely to rise to around 7.5 per cent of GDP on unchanged policies. The Government will need to signal its willingness to act to cut the PSBR by higher taxes or reduced spending plans. This will allow interest rates to remain low for longer, and offers the best prospects of maintaining a competitive pound and reducing the burgeoning current account deficit. There is room for a further cut in interest rates in the Budget to boost confidence and recovery, but rates may need to rise towards the end of the year if the higher prices resulting from the sterling devaluation start to feed into wage claims.

The Government should also consider seriously the need for reform of the institutional framework for policy making, to help restore credibility weakened by the manner of sterling's departure from the ERM. These should include greater openness about official thinking on monetary policy, and greater autonomy, within a new framework of accountability, for the Bank of England.
A Policy Framework for the New Chancellor
Authors: CURRIE DAVID , DICKS GEOFFREY
Published: January 2008

In the Mansion House speech, Mr. Clarke, the new Chancellor, left his options very clearly open. He reconfirmed his commitment, like his predecessors, to low inflation; but added that low inflation is not enough, asserting the importance of commerce. He asserted the need to reduce the public sector deficit, but did not commit himself to further measures beyond those already announced by Mr. Lamont. He argued for lower taxes, but said that taxes cannot always fall. He acknowledged the importance of narrow and broad money, but said that he would monitor a range of indicators in formulating policy. Even the greater emphasis relative to his predecessors on growth may have been more a matter of presentation, not a shift in policy emphasis.
Europe 1992 revisited: Assessing the Net Benefit for the UK
Authors: WILLENBOCKEL DIRK
Published: January 2008

Calendar time has passed the 31.12.1992 deadline for completion of the EC internal market and although a voluminous body of literature has accumulated over recent years, the predictive assessment of the economic consequences of the Single European Market cannot be considered as a settled issue. The widely quoted estimates of the welfare gains from ‘Europe 1992’ suggested in the Cecchini Report of the European Commission have failed to find the unanimous approval of the economics profession. The controversial academic discourse concerning the validity of these estimates has at least shown the need for further research in this direction. Moreover, in the face of the envisaged establishment of the Single European Area, which extends the internal market regime to the EFTA group, as well as in view of the imminent EC membership applications by several Community neighbours, the refinement of the tools for the analysis of further European integration retains a high ranking on the research agenda for future years.

As a contribution to the ongoing exploration of the economics of the Single Market, this article summarises the main results of a recently concluded London Business School research project to quantify the net gains from completing the EC internal market for the UK. The analytical approach adopted for the purpose is an applied computable general equilibrium (CGE) model which incorporates recent advances in international trade theory by allowing for the presence of imperfect competition, intra‐industry product differentiation and economies of scale. The approach overcomes various shortcomings of previous evaluations of regional integration programmes.

The quantitative results suggest in particular that the UK is a net winner of the Single Market programme, yet the aggregate welfare gain remains well below 0.5 per cent of benchmark GDP. The analysis furthermore indicates that the long‐tern industrial restructuring processes induced by the programme are likely to be far more moderate than is widely believed.
What role for the European Monetary Institute?
Authors: Currie David
Published: January 2008

To mark this month's move of the European Monetary Institute to Frankfurt, David Currie examines its role in the light of the 1992/93 ERM crisis. He argues that the EMI has an important role to play in coordinating European monetary policy whether or not progress is made towards EMU, and the track record of the EMI will be critical for the transit to a European Central Bank if it occurs.
BRITAIN'S MANUFACTURING REVIVAL IS SET TO CONTINUE
Authors: Sentance Andrew
Published: January 2008

The data for the first five months of 1994 have shown an encouraging pick‐up in manufacturing output, which grew only slowly over the course of 1992 and 1993. The production of investment goods has picked up particularly strongly, after declining over the course of last year. That has benefited the engineering industry, which before this recent surge had seen little benefit from the recovery. In this forecast release, we look in more detail at the sources of this improvement in the outlook for manufacturing industry. Last year, manufacturing output was held back by the recession elsewhere in Europe and the weakness of investment. These factors have now become more positive and will sustain a strong manufacturing performance over the remainder of this year and into 1995. These demand side influences are also being assisted by positive developments on the supply‐side of the economy, which should help to sustain the revival of manufacturing industry over the medium term.
LETTING THE GOOD TIMES ROLL
Authors: Sentance Andrew
Published: January 2008

Kenneth Clarke must wonder what is so difficult about being Chancellor of the Exchequer. Since he took over at the Treasury in May 1993, the UK economy has grown at an annual rate of 3.5‐4.0% and unemployment has continued to fall. Underlying inflation has remained around the middle of the government's 1–4% target band. And the current account deficit on the balance of payments has shrunk. True, the Chancellor had to bring in a tax‐raising Budget in November, though even here much of the hard work had been done by his predecessor. The policy decisions over the next year or so will prove much more tricky, however. The Chancellor faces pressure to relax fiscal policy in the Budget. And he will almost certainly have to raise interest rates ‐ possibly before the end of this year. In this Forecast Release we look at what the outlook for the economy now implies for the policy judgements that the Chancellor must make over the remainder of this year.
CONSUMER RECOVERY: LOSING MOMENTUM
Authors: Sentance Andrew
Published: January 2008

Retail sales figures for February showed a fall of 0.5%, raising the possibility that the consumer recovery may be losing momentum. That would be consistent with our latest forecast, published in February's Economic Outlook, indicating a slowdown in consumer spending growth from the present rate of over 3% per annum to between 1 and 1.5%. In particular, our forecast of consumption growth for 1995 ‐ 1.1% ‐ is markedly lower than the consensus expectation of over 2%. In this Forecast Release, we look in more detail at the arguments for taking a cautious view of consumer prospects.
SPECIFIC GRAVITY AS A FACTOR IN THE VERTICAL DISTRIBUTION OF PLANKTON
Authors: EYDEN DORA
Published: January 2008

(1) It is established that the specific gravity of Daphne pulex varies. The state of starvation of the animal, and the number of young in the brood pouch, separately affect the specific gravity.

(2) The release of the young from the brood pouch causes an instantaneous decrease of specific gravity.

(3) The specific gravity varies in animals of the same size at different periods of the day and night, attaining a maximum shortly after sunrise, and reaching a less well‐defined minimum about midday.

(4) D. pulex is most abundant in shallow water shortly before sunrise, and most scarce from midnight till just before dawn, and when the sun is shining directly on the water.

(5) Changes in specific gravity must be taken into consideration when investigating the causes of the vertical distribution of the plankton.
OOGENESIS OF LITHOBIUS FORFICATUS
Authors: NATH VISHWA
Published: January 2008

1. The nucleolus of the oocyte nucleus is at first basiphil, then amphophil and finally completely acidophil showing prominent vacuoles. It discharges into the nucleus deeply basiphil circular and irregular masses of a chromatin‐like substance. The former remain in the nucleus and form secondary nucleoli which, becoming acidophil, ultimately disappear. The irregular masses, the nucleolar extrusions, are first plastered round the nuclear membrane where they bud off small pieces in the cytoplasm. Later they are detached from the nuclear membrane and lie in the cytoplasm where they become amphophil and then acidophil. As a rule they disappear before the vitelline yolk puts in its appearance.

2. Strong evidence has been adduced by a comparative study of the various genera of scorpions with and without yolk in the oocytes in favour of the view that nucleolar extrusions are probably concerned in yolk formation.

3. The Golgi apparatus in young oocytes consists of small rods collected in a patch on one side of the nucleus. Evidence, both direct and indirect, has been adduced in favour of the view that Golgi rods are transformed into fatty yolk. The Golgi rods, therefore, have a nutritive function in the oocyte of Lithobius.

4. The fatty yolk is blackened even by chrome‐osmium, indicating the presence of free unsaturated fat in its constitution. The true vitelline yolk appears a considerable time after the fatty yolk and goes yellowish brown in osmic acid.

5. In a centrifuged egg fixed by prolonged osmic acid method the fatty yolk forms a black band at one pole, whereas the vitelline yolk is thrown down at the other pole. The middle area of the egg consists of the mitochondria, the nucleus and the unchanged Golgi rods whose amount is, roughly speaking, inversely proportional to that of the fatty yolk.
THE CHEMICAL CHANGES DURING THE METAMORPHOSIS OF INSECTS
Authors: NEEDHAM DOROTHY MOYLE
Published: January 2008

The alterations in gaseous exchange and in carbohydrate and fat content of the organism during metamorphosis are described. The nitrogen metabolism of this period is considered, the various fractions, protein nitrogen, basic nitrogen, water‐soluble nitrogen, chitin nitrogen, uric acid nitrogen, etc., being followed as far as possible. The formation of the silk is considered, and the differences in metabolism between insects forming large and those forming insignificant cocoons.

The question of the physico‐chemical causes of the onset of histolysis and of regeneration, and the question of the origin of the low respiratory exchange during the middle period of pupation, are discussed.
THE PHYSIOLOGY OF HIBERNATION
Authors: GORER. P. A.
Published: January 2008

1. It is stated that hibernation is but one manifestation of a property very widely spread amongst living organisms, i.e. that of withdrawing from an unfavourable environment. It is urged that comparison of hibernation with other analogous conditions would be valuable. Evidence is given that somatic changes occurring for various unknown reasons may cause the assumption of lethargy at an unusual time. Therefore somatic changes are as important in determining the cause of hibernation as environmental changes.

2. The metabolism of hibernating animals, which is the lowest metabolism required to maintain the existence of protoplasm, is discussed. The various values obtained in connection with the respiratory exchange are mentioned. It is pointed out that the chief points of contention concern themselves with the possible effects of temperature on the solubility of CO2. From experiments covering long periods it is urged that the observed phenomena cannot be explained in this way. The adaptation to changes in temperature is discussed to a certain extent.

3. The governor of metabolism amongst the higher animals apart from the nervous system is the endocrine system. The value of various histological findings, and of various injections, is discussed. It is pointed out that lack of structural modification does not necessarily eliminate the possibility of functional modification. Special attention is paid to the importance of the pituitary.

4. The effects of varying concentrations of water on the metabolic processes are discussed. It is also indicated how the water content can modify the behaviour of an animal, and that a reduction of it may have opposite effects in various cases.

5. Observations are given which demonstrate the remarkable adaptivity, and primitive structure, of the nervous system of hibernating mammals. Particular stress is given to the comparatively slight effects of decerebration on the heat regulative and postural reactions of such animals.

6. The various internal and external stimuli tending to terminate lethargy are mentioned, as well as the phenomena connected with the actual return to activity. Emphasis is laid on the need of direct calorimetry to elucidate this problem in the mammalia.
SOME BIOLOGICAL ASPECTS OF THE POPULATION PROBLEM
Authors: HOGBEN LANCELOT
Published: January 2008

1. The logistic curve which Pearl has applied to the growth of populations of the fruit fly is the law of an experiment carried out under certain restrictions. The assumptions from which the law can be deduced are assumptions whose biological significance is problematical. Their sociological relevance is obscure. There is no sound reason to believe that the decline in European birth‐rate is the expression of a universal law governing the growth of populations. No known biological data conflict with the view that the declining fertility of European communities is a phenomenon sui generis.

2. Occupational, statistics from all countries where the birth‐rate has fallen indicate a differential decline. To estimate the genetic significance of differential fertility existing methods are inadequate, and new methods for the detection of genetic differences in social behaviour are required. There are some indications that differential fertility is an ephemeral feature of present‐day conditions because the decline of the birth‐rate is extending to the labouring classes. On this view civilisation appears to be faced with the alternative of devising new incentives to parent‐hood or facing extinction through a progressive decline of population.

3. There is insufficient reason to believe that improvement in infant welfare has significantly diminished the expectation of life in the later age groups—or that it is likely to do so in the immediate future.
RECENT PROGRESS IN THE CHEMISTRY OF MUSCULAR CONTRACTION
Authors: EGGLETON PHILIP
Published: January 2008

I. In the last few years it has been found that:

(a) A large proportion of the acid‐soluble phosphate originally classed as “inorganic” is actually combined with creatine (creatinephosphoric acid, phosphocreatine, phosphagen).

(b) Most of the organic phosphate hydrolysed by the muscle enzymes during autolysis (the fraction hitherto known as “lactacidogen”) is adenosinetriphosphoric acid (adenylpyrophosphate).

(c) There is no hexosediphosphoric ester in normal muscles, but a small amount of a hexosemonophosphoric ester. To this the name lactacidogen is now applied.

2. Concerning the chemical events accompanying activity of a muscle, two discoveries in particular have greatly altered their interpretation:

(a) It is found that the production of lactic acid occurs partly, and in some cases entirely, after the activity has ceased.

(b) The production of lactic acid does not occur at all in muscles suitably poisoned with fluoride or iodoacetate. In such muscles the energy production is proportional to the extent of the accompanying phosphagen breakdown and is limited by the amount of phosphagen in reserve.

3. Arising out of these and other considerations discussed in the text, a reasonable working hypothesis of muscular contraction is that the thermal and mechanical energy released in activity comes from the (exothermic) breakdown of phosphagen During the subsequent recovery period this phosphagen is resynthesised, the necessary energy being derived:

(a) In the absence of oxygen; from the conversion of glycogen to lactic acid. Restitution in this case is only complete in muscles which have used up nearly all their reserve of phosphagen. There seems to be no alternative to the glycolysis mechanism as an anaerobic source of energy.

(b) In the presence of oxygen, from the combustion probably of any available foodstuff, though carbohydrate seems to be the material used for choice by skeletal muscles.

4. Other directions in which rapid advance has been made in recent years are:

(a) The isolation of the constituent parts of the ferment system responsible for the glycolytic process in muscle.

(b) The perfection of a delicate and rapid method of measuring the vapour pressure of muscles. One of the immediate results of the application of this technique has been the demonstration that the catabolic changes so far studied in connection with muscular activity do not account for all the osmotic pressure change. There must remain reactions of quite considerable extent so far undiscovered.
THE DIGESTION OF WOOD BY INSECTS AND THE SUPPOSED ROLE OF MICRO‐ORGANISMS
Authors: MANSOUR K. , MANSOUR‐BEK J. J.
Published: January 2008

The relation between certain insects and the intracellular micro‐organisms they harbour is obscure and cannot be described as symbiotic for the following reasons:

Sterile mycetomes are known to occur in some species closely related to others with heavily infected mycetomes.

Defloration experiments have been carried out successfully without any harmful effect to the host insect.

Intracellular micro‐organisms in xylophagous insects cannot be considered as playing an important role in the digestion of wood for the following reasons:

In weevils with wood‐eating habits which have intracellular micro‐organisms, the latter only pass into the lumen of the gut of their host during the adult stage when the insect is not feeding on wood.

Some wood‐eating species of insects harbour intracellular micro‐organisms, while closely related species with similar feeding habits are free from these.

The intracellular micro‐organisms of some wood‐eating forms have been cultivated in vitro and found to be unable to break down cellulose.

The relatively high content in nitrogenous substances of different kinds of wood, and the general occurrence of proteolytic enzymes in insects, make the assumption that intracellular micro‐organisms fix atmospheric nitrogen for the use of their host superfluous.

The extracellular intestinal micro‐organisms of certain lamellicorn larvae and of some termites play no role in breaking down cellulose for the use of their host. They are utilised as a direct food source. Such insects are therefore better referred to as micro‐organism‐feeders.

True wood‐eating insects derive the necessary carbohydrates from the wood they live on through the activity of their own enzymes. The enzyme complex in such insects has been found to vary from species to species.

The carbohydrate components of wood vary in quantity in different kinds of wood.

Some true wood‐eating forms depend upon starch and soluble sugars for their source of carbohydrates. Such insects have no cellulase and can consequently only live in kinds of wood comparatively rich in starch and sugars.

Other true wood‐eating forms secrete cellulase and are therefore able to live in kinds of wood comparatively poor in starch and soluble sugars.

The occurrence of hemicellulase has been demonstrated only in a very few cases and the value of the hemicelluloses as food for wood‐eating insects has not been thoroughly investigated.