But wages policy, public sector prices policy and monetary expansion store up trouble, particularly inflation. Balance of payments current account deficit of 3.5 billion in 74,, and the effective exchange rate index falls from 83 to 73.
Stagflation hits the world, then Britain.
Pay policy from August 75, for 3 years. 1976 - mid 1979 Recovery. Balance of payments current account again in surplus in 78, and slight gains for the ER while still remaining competitive in trade. The collapse of pay policy in the ' winter of discontent ' and postponed public sector settlements. Rising inflation, rising ER, and a Balance of payments current account deficit.