asked the Chancellor of the Exchequer what evidence now supports his view that the economy is recovering.

In the third quarter of 1982, output was about 1·25 per cent. above its low in the spring of 1981. Inflation is now at the lowest level for 10 years and expected to fall to 5 per cent. this spring. Exports have been holding up extremely well in the face of declining world trade. Consumer demand remains strong, and construction activity has been rising. Industrial companies' profits are recovering and manufacturing productivity has risen strongly since the end of 1980. We expect the modest recovery to continue this year while continued adherence to firm and balanced monetary and fiscal policies provide the basis for sustainable increases in output and employment in the medium term.