XN000022-1981-02-25 — Page 5

WEDNESDAY, FEBRUARY 25, 1981

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FOURTHLY, THE OVERALL GROWTH RATE OF EXPENDITURE ON BUILDING AND CONSTRUCTION IS FORECAST TO BE ONLY SEVEN PER CENT, WHICH IS PROBABLY NOT MUCH GREATER THAN THE LIKELY GROWTH IN CAPACITY, THUS THE CROWDING OUT EFFECT, CAUSED BY THE HIGHER GROWTH RATE IN THE PUBLIC SECTOR EXPENDITURE THAN THE PRIVATE SECTOR, SHOULD NOT BE TOO SERIOUS.

FIFTHLY, THE GROWTH RATE OF PRIVATE CONSUMPTION EXPENDITURE, AT EIGHT PER CENT, WILL BE CONSISTENT WITH THE ACHIEVED GROWTH RATE OF REAL INCOME IN 1980 OF 9.1 PER CENT, AND THE FORECAST GROWTH RATE IN 1981 OF 7.5 PER CENT.

SIXTHLY, THE GROWTH RATE OF IMPORTS OF GOODS, AT 13 PER CENT AND THAT OF TOTAL EXPORTS OF GOODS, AT 12 PER CENT, WILL BE ROUGHLY IN LINE WITH EACH OTHER AS THEY WERE IN 1980.

SEVENTHLY, THE VISIBLE TRADE GAP WILL WIDEN SLIGHTLY TO 13.2 PER CENT IN 1981 FROM 12.1 PER CENT IN 1980, BUT STILL WITHIN THE RANGE OF OUR HISTORICAL EXPERIENCE, AND THE VISIBLE AND INVISIBLE TRADE GAP WILL WIDEN TO FIVE PER CENT FROM 3.7 PER CENT. BUT IN RELATION TO FLOWS OF FUNDS ACROSS THE EXCHANGES, THIS SHOULD NOT PRESENT A FINANCING PROBLEM.

FINALLY, THERE WILL BE LOWER RATES OF INCREASE IN PRICES AS WORLD INFLATION SLOWS DOWN AND AS THE INTERNAL COST/PRICE STRUCTURE DEFLATES.

REVIEWING OUR ECONOMY IN 1980, SIR PHILIP SAID THERE WERE TWO REALLY SIGNIFICANT DEVELOPMENTS IN THE SECOND HALF OF 1980.

THE FIRST WAS A SHARP SLOW DOWN IN THE GROWTH RATE OF DOMESTIC EXPORTS, FROM A HIGH 18 PER CENT, IN REAL TERMS, IN THE FIRST HALF, TO ONLY FIVE PER CENT IN THE SECOND HALF. THIS SLOW DOWN REFLECTED DEVELOPMENTS IN THE ECONOMIES OF OUR MAJOR MARKETS, PARTICULARLY IN THE UNITED STATES, WHERE THERE WAS A SHARP DECLINE IN RETAIL SALES IN THE SECOND QUARTER OF 1980 WITH ONLY A LIMITED RECOVERY IN THE SUBSEQUENT TWO QUARTERS.

THE SECOND SIGNIFICANT DEVELOPMENT WAS AN ACCELERATION IN THE GROWTH RATE OF PRIVATE CONSUMPTION EXPENDITURE, FROM 22 PER CENT IN THE FIRST HALF TO 35 PER CENT IN THE SECOND HALF.

PERSONAL ALLOWANCES TO GO UP

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THE FINANCIAL SECRETARY, SIR PHILIP HADDON-CAVE TODAY PROPOSED AN INCREASE OF THE PERSONAL ALLOWANCES FOR SINGLE PEOPLE TO $22 500 FROM $15 000, AND FOR MARRIED PERSONS TO $45 000 FROM $30 000.

HE ALSO PROPOSED AN INCREASE IN CHILD ALLOWANCES FROM $5 000 TO $7 000 FOR THE FIRST CHILD- AND FROM $4 000 TO $5 000 FOR THE SECOND CHILD. BUT THERE WILL BE NO CHANGE IN ALLOWANCES FOR OTHER CHILDREN.

SIR PHILIP ALSO PROPOSED A 40 PER CENT INCREASE IN THE DEPENDENT PARENT ALLOWANCE TO $7 000, WHICH HE SAID WAS CLAIMED BY 65 000 TAXPAYERS FOR 80 000 DEPENDENT PARENTS.

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