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would be some additions to the existing plans, but he believed that they were fully justified. He thanked colleagues for their co-operation in the Survey exercise.

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THE CHANCELLOR OF THE EXCHEQUER said that the Chief Secretary was to be congratulated on the skilful conduct of this year's Survey, which had been a difficult one from the outset. In the economy as a whole, it had become apparent by July that demand had continued to grow more quickly than had been expected at Budget time. More recent events had confirmed this buoyancy of demand. He now expected that, as a result, the current account deficit for this year would be £20 billion as against the £14 1/2 billion forecast in the Budget and that Retail Price Inde (PI) inflation in the fourth quarter would be 7 1/2 per cent compared with the forecast of 5 1/2 per cent. Those figures were clearly higher than was desirable, but they would not come surprise to the markets, who accepted that the economy was fundamentally in a sound position. Business investment ld probably grow by over 9 per cent this year, giving a total of 40 per cent over the last three years. This worsened the trade gap in the short-term but would improve it in the long term.perts had risen strongly and growth in non-oil goods was expected to be over 11 per cent, the highest rate since 1973. Unemployment had continued to fall, although a rise was more likely than a fall over the next few months. He now estimated debt repayment over the year at £12 1/2 billion compared with the £13 3/4 billion forecast earlier. The shortfall was the result of lower privatisation proceeds and higher than expected natinsurance rebates due to the uptake of personal pension, which was in itself a considerable success story.

As to next year, it was clear that the recent very high growth in domestic demand and output could not be sustained.

It was essential to damp down demand if fiation was to be reduced. This was the pre-requisite for a reation of steady growth. He expected the economy to slow down during 1990, with an increase in GDP of 1 1/4 per cent, compare with the Budget forecast of 2 per cent. Domestic demandoid be flat: consumer expenditure and investment would continue to grow, but more slowly than this year, and stockbuilding was likely to be reduced. The current account deficit should fall, by over 1 per cent of GDP, to £15 billion. Inflation would also fall, by the RPI measure, to 5 3/4 per cent by the fourth quarter of 1990, although less distorted measures such as producer price increases were likely to be at around 4 per cent.he level of inflation should continue to fall after the end of 1990 but it was clear that policy must remain tight if inflation brought down as quickly and as substantially as the Go wanted.

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