The growth of the UK economy continues at a brisk rate. Manufacturing output is especially buoyant. The absence of evidence suggesting a moderation in output growth reflects the continuing strong rate of growth in domestic demand. There is little hard evidence to date of a slow-down in consumer demand. Domestic demand growth continues to outstrip both output growth and the supply capacity of the economy. This is despite the current 'boom' in investment. The deficit on current account therefore continues to deteriorate. The underlying trade position is precarious and is symptomatic of high domestic demand and inflationary pressure. With many indicators pointing in an upward direction, the prospects for inflation are therefore the most immediate cause for concern
