On the basis of past performance, the medium term prospects for the British economy are grim. A trade deficit of current proportions cannot be sustained indefinitely. Nor can it be eliminated except by a long period of slow growth—no more than 1% or so for up to five years. Even a continuation of the remarkable increase in manufacturing productivity shown in the 1980s will not resolve this dilemma. As the British economy enters the 1990s the key question is whether the responsiveness of British industry to the export incentives offered by devaluation and slow domestic growth is much greater than in previous periods of recent economic history. There is evidence to suggest that this might in fact happe