The Government’s economic policy is now also directed at putting a stop to the well-known British pattern of stop-go, boom-bust. Gordon Brown’s first budget had a moderating effect on the exuberant cyclical conditions. Right now, the first signs of a cyclical slowdown are showing up. Hopefully, they do not portend a bust for the British economy. But we will have to wait and see.
The compositional shifts in the capital account have been consistent with the policy framework, imparting stability to the balance of payments. The sustainability of the current account is increasingly viewed as consistent with the volume of normal capital flows.