Earlier prognostications of a slow-down in the rate of growth of output in the British economy have been confounded by recent evidence. Continuing high levels of output growth are a reflection of rapid growth in domestic - and particularly consumer - demand. But domestic demand is growing at a much faster rate than output and there are indications that the differential increased during the second quarter and middle of the year. The inevitable result has been a marked deterioration in the balance of payments. The government's use of interest rate policy as the sole instrument regulating the expansion of domestic demand leaves much to be desired
