Recent events have understandably led most commentators to become much more optimistic about Britain’s competitive prospects. Sales are almost booming, reflecting real GNP growth in 1987 of 5.2%, higher than the USA and even Japan, and considerably higher than European rivals such as France and Germany (Sunday Times, 1988). Growth in manufacturing output has increased to an annual rate of 6.5% 1987a) and manufacturers generally are operating close to capacity limits.