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Key facts on 1994
1994 - Recovery, but still a lack of a real `feel-good' factor. Growth is healthy at 4%, and the output gap is closing considerably from the recession of the early `90's. However, investment remains stubbornly low, particularly for this stage of the cycle - only 15% of GDP (peaked in '89 at 20% of GDP).
Inflation remains low at just over 2%.
Unemployment falling well to under 2.5m. OECD produced a major report analysing worldwide unemployment.
Balance of payments deficit shrinking fast at only ½% of GDP (£4bn), thanks to strong export growth and a growing oil surplus. Could also be J-curve effect from the 1992 depreciation of £?? 1994 World Competitiveness League report showed the UK in 14th position (an improvement from 19th the previous year).
Various reports (Joseph Rowntree Foundation and the Institute for Fiscal Studies) showed the widening income distribution in the `80' and `90's.
PSBR falling slowly, but still around £40bn -nearly 7% of GDP. Budget consolidated the 1993 changes, but a backbench rebellion prevented the increase in VAT on fuel being increased right up to 17½%. Petrol, alcohol and tobacco bore the brunt of the increases instead.
Interest rates rose a little to 6¼% by the end of the year.
The Royal Commission on Environmental Pollution report on transport painted an alarming picture of rapidly increasing car use, worsening congestion and deteriorating air quality.
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