Britain is growing - this is no time for a stimulus The current period is reminiscent of 1937, when Keynes said the time was wrong to boost spending One of the better permanent secretaries of HM Treasury, the late Douglas Allen, used to respond to requests for more official data by saying that such vast amounts of data should be published that commentators would drown in them and cry for help. His desire has been granted in spades, judging by the many dozen (if not hundreds) of tables and charts in the recent so-called Autumn Statement, published last week, and the accompanying new report of the Office for Budget Responsibility. But I would add that there are far too many percentages and rates of change in them, and not nearly enough absolute numbers. Samuel Brittan How to keep one's head above water amid all this data? Admittedly it would have been helpful if there had been more analysis of the present and recent past and less of the crystal-gazing that goes by the name of forecasting. George Osborne. the chancellor, probably looked first at the forecasts for the supposedly cyclically corrected current budget deficit and at the ratio of the national debt to our gross domestic product. These numbers show the deficit, as defined by the Treasury, falling below zero in 2017-18 and the public sector debt ratio peaking at 80 per cent of gross domestic product in 2015-16 - a probable election year. If that is achieved, it will mean that the chancellor's five-year forward-rolling aim to achieve a current budget balance will at last be met, but his target for government debt narrowly missed. Mr Osborne can comfort himself with the thought that, on OBR projections, he will be doing better than all the listed euro counties except Germany and about as well as the US. But my own focus is elsewhere, namely on the related but different question of how much unused capacity there is in the British economy - or, in modern jargon, the size of the output gap. This concept, it still seems necessary to remind people, does not refer to what would happen if every unemployed person, shed and brickyard were pulled into operation, but the gap between current output and what could be achieved without rising inflation. This is now running on OBR estimates at about 2 per cent of GDP, declining to almost zero by 2018. This is very much in line with the Bank of England, the International Monetary Fund and the OECD, but the National Institute and Oxford Economics, a consultancy, who favour more "expansionist" policies, are more pessimistic. These percentages may seem small, but UK GDP is now running at about £1.5tn; a 2 per cent shortfall represents almost £500 for every man, woman and child. Does this mean Mr Osborne should stand on his head and go for every conceivable tax cut or spending increase? Or that the BoE should encourage financial institutions to lend to everyone in sight? No, it does not; but not for the usual "sound money" reasons. As every student ought to know, inflationary pressure responds not only to the output gap but to the rate at which the gap is changing. There is a wealth of indicators showing that real economic growth has been accelerating during 2013, a fact that the OBR accepts, but puzzles to explain. While it expects growth to slow down again next year, the present - when the capacity gap is closing - seems absolutely the wrong time to apply a stimulus. The current period is reminiscent of 1937, a year after the publication of John Maynard Keynes's General Theory, widely regarded as a highbrow expansionist manifesto. Nevertheless, Keynes disappointed some of his more radical followers by saying that the time was not right for a general stimulus "from the centre." What Keynes said on the eve of the second world war applies mutatis mutandis to today. How will we know when the time does come for a general stimulus - or, alternatively, for the application of the brake? There is no magic formula, but those of us who are not keen forecasters will look with eagle eyes at the actual movement of both real and nominal GDP. The OBR rightly focuses on nominal GDP, although more for its relevance for the fiscal balance than as a key economic indicator in its own right. It envisages that it will grow in the next few years at an average of 4.5 per cent, which the OBR believes is enough both to close the fiscal gap and to restore the nearest possible approximation to full employment by 2017. This is not very far from the 5-6 per cent objective for nominal GDP growth that I have frequently urged in this column. Of course the authorities should not mindlessly step on the brake or accelerator every quarter or month if this rate is missed or exceeded. But it does provide a measuring stick. Meanwhile, let us thank heavens that a floating exchange rate avoids the supposed need for the government to lecture us every day on the balance of payments. Of course, the abysmal trade figures for the third quarter do matter, but as elements in the overall picture and not as the supreme guide to economic policy.