The average rate of increase in industrial production from 1946 to 1954 was 5 per cent, while the real national product increased by 3 per cent. The nation used this increased output, first, for exports; second, to make good the capital losses of the war years by new investment; and, finally, for rearmament. Those who wonder at the rocketing German economic recovery after 1949 and the relative slowness of British economic advance should ponder the fact that in 1950-3 defense expenditure gobbled up _approximately half_ of the British total output. The rationing and other restrictions held over from the war held personal consumption at bay until 1954. Wages rose, but these were offset by a sharp increase in prices, which by 1952 were about 50 per cent above those of 1945. After that year, however, earnings rose more rapidly than prices. With the end of wartime controls after 1952 the standard of living, especially that of the industrial working class, rose perhaps more rapidly than it had ever done before. The increase in production, the end of rationing, the rises in wages and prices, and the boost in internal consumption all took place against a background of full employment. In the United Kingdom unemployment averaged less than 2 per cent of the working population in 1946-54. This, then, is the short story of British recovery since the war. By the summer of 1956 the Central Statistical Office could announce that from the beginning of 1946 through the end of 1955 the national output of goods and services had increased in volume by one third. Reckoned in monetary value, the increase was even greater: the figure for 1946 was £8,843,000,000 ($24,480,400,000), while for 1956 it was £16,639,000,000 ($46,589,200,000). The difference between the increase in value and the increase in production is due to the continuous rise in prices since 1946. These are impressive figures. But no one in authority in Britain believes that the nation can rest on them. The double problem of maintaining exports abroad and defeating inflation at home remains. The two are closely related. In 1950 Britain had grabbed 26 per cent of the world market for manufactured goods. German, Japanese, and other competition has now reduced the British share to about 20 per cent, the pre-war figure. To maintain it, Britain must continue the export drive, and this, in turn, involves the attack on inflation. Inflation began at the time when the British people were emerging from years of war and post-war austerity. There was more money, and suddenly there was plenty to buy as one by one the controls on raw materials, building licenses, food, and clothing disappeared. By 1955 cars and other products that should have gone for export were being sold in bulk in Britain, and gasoline was being imported for them. Industries that should have been almost totally devoted to export trades were producing for a lucrative home market.