For the government, judging the relative importance of sterling, domestic demand, and how close the economy is to capacity, will be unusually tricky.

ECONOMIST: The economy

On the demand side, in the past couple of months sterling has risen again against the euro (see chart), and therefore may be squeezing exports once more.

ECONOMIST: The economy

Adhering to the public-spending plans set in last November's budget and raising taxes to lower borrowing, although an unlikely prospect, would dampen demand, so reducing expectations of higher interest rates, weakening sterling and boosting exports.

ECONOMIST: The economy

The depreciation in sterling over the past year should support net exports, but the prospects for demand growth in the UK's main export markets have worsened.

BBC: Central banks' official statements

Sterling will reside in the software group under WebSphere, IBM's on-demand business software.

FORBES

This would have slowed demand, perhaps allowing the Bank to cut rates and taking some of the recent strength out of sterling.

ECONOMIST: The fiscal arithmetic

Exporters are already labouring under the weight of sterling's appreciation between mid-1996 and early 1998, to which has been added faltering demand elsewhere in the world.

ECONOMIST: The economy