Key facts on 1996
1996 - Growth remained at 2½% for the year, but stronger growth in services (4%) and very slight growth in construction. House prices grew at 5% for the year, helping to reduce negative equity and holding out hopes for further improvements in the construction industry.
Unemployment continues to fall to below 7% of workforce.
Consumer confidence begins to return with stronger growth in retail sales. Consumer credit growing fats helped by reductions in the interest rate during 1996, though interest rates nudged up again towards the end of the year.
Inflation still just above target (target 2½%) at 2.8% in the middle of the year. Increased inflationary pressures nudged it upwards in the second half of the year, but earnings growth still low.
Balance of payments improving considerably with a very small deficit, due to strong growth in exports and particularly car sales. European football championship helped boost invisible earnings from tourism.
PSBR continues its downward trend standing at just over 3% of GDP for '96 (down from a peak of 7% in 1993). Budget was cautious:
- 1p cut in income tax standard rate - 24p to 23p
- Usual increases in cigarettes and most booze, but beer and wine unchanged. What might the Chancellor's favourite drinks be??
- Duty on `Alcopops' increased by 40% to discourage under-age drinking
- Various selective increases in public expenditure. No surprises that they were mainly on NHS, education and Law and Order.
- Introduction of the `Landfill Tax' - the birth of environmental economic policies to influence behaviour??
Motorway congestion levels rose 5.3% and overall traffic up 16.4%. "In a typical day in November, the M25 caused some 518,000 motorists to waste the equivalent of 29 years in time."