The right of European citizens to work in other member states has been in place for many years, yet levels of movement have been lower than expected. Employers play a central role in facilitating mobility, by recruiting across national boundaries and transferring staff. Their practices are therefore likely to have a considerable impact on the extent of movement, and on the type of employees involved. This article explores the practices of employers in the chemicals industry, a key sector of the European economy. The focus of the research, which was commissioned by the European Centre for the Development of Vocational Training (CEDEFOP), was on the recruitment and transfer practices of employers, and their treatment of ‘foreign’ qualifications. The article identifies the range of approaches found in the industry and presents some of the main issues to employers in relation to recruitment and transfer across member states.

The previous Labour government pledged to abolish child poverty and introduced a range of welfare reforms that emphasised the role of work as the primary route out of poverty. This culminated in the Child Poverty Act (2010) which commits all future governments to the abolition of child poverty. This paper examines New Labour's record on child poverty and examines the factors responsible for its change. While the welfare reforms of the late 1990s did increase work among families with children, this didn't translate into large falls in child poverty. Those entering work still relied on substantial increases in government benefits to lift them over the poverty line. The current coalition government has reaffirmed its commitment to the Child Poverty Act and is also emphasising the role of work. The lessons of the past decade cast severe doubt on whether the current coalition government strategy of promoting work will be any more successful in reducing child poverty. With planned benefit cuts in the pipeline we could well experience some substantial increases in child poverty over the coming years.

Future demand for domestic appliances in the United Kingdom has been considered in two previous articles in the National Institute Economic Review. The first, published in 1960, discussed prospects for the new decade; the second, which appeared in 1967, first compared the original forecasts with actual developments up to that time and then provided a fresh appraisal of the outlook, extended to 1980. The present article contains a further reassessment, covering the same period, in the light of more recent experience.

Banks within Europe have become larger and more international as Europe has moved towards a unified financial services market, but this trend has been reversed since the crisis. In order to establish the effect of these structural changes on output in Europe, we use a micro data set to investigate the impact of size (as measured by asset size) on banks' net interest margins. We show that larger banks offer lower borrowing costs for firms, which raises sustainable output. We then use NiGEM to look at the impact of banks becoming smaller and moving back into their home territory. We investigate the impacts on output according to country size, showing that the effects are generally larger in small countries, and also larger in economies that are more dependent on bank finance for their business investment decisions.

In this paper we explain some of the difficulties of providing forecasts of the financial benefits of early intervention programmes, focussing on those delivered during the early childhood period. We highlight the diversity of early intervention, and the complexity and multiplicity of outcomes. We summarise recent work at the Early Intervention Foundation to assess the evidence on the impacts of early intervention, recognising the diversity of approaches to delivery and the importance of innovation and local practice as well as of rigorous approaches to evaluating causal effects. We also describe new ways of assessing accurately the local fiscal costs of late intervention and consider the implications of this for addressing the well-established barriers to investment in prevention. Our analysis brings to the fore gaps in the evidence from which even the most rigorous ‘gold-standard’ research is not immune. These limitations prevent the production of an accurate and realistic cost-benefit ratio or net present value for the majority of programmes as delivered in practice. We suggest some paths towards a firmer foundation of evidence and a better alignment of evidence and policy.

The financial crisis has led to a change in the mix of capital and labour employed in the UK and a sharp decline in total factor productivity. This has meant that labour productivity has not recovered to any great degree since the financial crisis. We explore the role of overall and sectoral productivity in explaining the fall in labour productivity, but also question the extent to which productivity in the service sector may be measured with error. We outline the links between a constrained financial sector and a fall in overall productivity – in which intangible capital seems to play an important role – and illustrate how a financial sector providing intermediate services may act to amplify the business cycle impetus from a total factor productivity shock within the context of a calibrated model.

UK manufacturing productivity has for a long time lagged behind the US. Explanations put forward for the ‘productivity gap’ include disparities in capital stock levels, the quality of the labour force and different rates of technology adoption. The questions addressed in this paper are, ‘has slower UK up-take of information technology exacerbated the productivity gap? Can this account for the slowdown in the manufacturing sector in the mid-1990s, a period when the US experienced substantial growth?’ Using the growth accounting method and industry data for the period 1988-2000, the paper indicates considerable industry heterogeneity in both the UK and the US, which aggregate sectoral analysis is likely to obscure. The results suggest that whilst the UK continues to lag behind the US in terms of ICT capital shares, differences in rates of growth of ICT capital are minor. Labour quality indicators show positive ICT and non-ICT skilled labour growth and declines in lower skilled categories in both countries, with the UK leading the US in recent years. Thus UK manufacturing has invested significantly in new technology inputs. The paper also shows there are similarities in the cross industry patterns of productivity performance in the two countries but growth rates in the UK are significantly below those in the US across the board. The paper then considers alternative explanations for the slowdown in UK manufacturing productivity in the mid to late 1990s and suggests this may be due to macroeconomic factors peculiar to that period and lags in the adjustments of firms to a changed environment.

In the context of economic management, with final targets for money GDP, wealth and the foreign exchange reserves, the exchange rate can be treated as an intermediate target. Monetary policy is used to keep the exchange rate close to its target and the target itself adjusts in response to information about the final targets. The target exchange rate can be used with main emphasis on either money GDP or on wealth. The latter is not possible if the wage—price loop is powerful. Two reruns of history are presented. The first uses the exchange rate mainly to look after money GDP with wages following their historical behaviour. The second uses fiscal policy to look after money GDP and the exchange rate to look after national wealth. It requires a reform of wage bargaining to be successful.

This paper presents some results derived from a wider National Institute study of labour productivity differentials in non-service activities in the British, American and German economies, to be published as a NIESR Occasional Paper during the autumn 1982. For the most part the present paper focuses on the international labour productivity differentials which emerge at the major sector level—for agriculture, extractive industries, manufacturing, construction, public utilities and transport. The complete study will also consider productivity differentials for component activities in these sectors and seek some explanation of contrasts in international industrial performance in terms of such factors as capital intensity, market size, rates of growth, labour force quality etc.

Radical changes have been implemented to pension schemes across the UK public sector from April 2015. This paper simulates how these changes will affect the lifetime pension and how the negotiated pension changes compare across six public sector schemes by level of education. Specifically, we simulate the occupation specific Defined Benefit (DB) pension wealth accumulated for a representative employee over the lifecycle by factoring in the recent changes to pension conditions. We find that less educated workers with low or moderate earnings in the NHS, Local Government and Civil Service schemes are the winners having secured an increase in the value of their pension of between 10–20 per cent. Graduate workers with faster wage growth in the Civil Service, Teachers and Local Government schemes lose between 3 per cent and 5 per cent. This is in sharp contrast with the Police and Fire services who have lost around 40 per cent irrespective of their education.

Measured health output in the UK declined sharply during the Covid-19 pandemic, despite the evident large increase in some National Health Service (NHS) activities such as critical care, and the new test and trace and vaccination programmes. We explain the measurement methods applied to public services that produced the published decline, in the context of the inherent difficulties of defining and measuring health output and productivity; and describe the changes in practice that had to take place in NHS hospitals. We also discuss, on the basis of these changes including increased use of technology, the likely outlook for healthcare productivity. We conclude that within NHS England capacity, constraints have contributed to substantial falls in non-Covid-19 healthcare output and argue that increased capacity in the social infrastructure of the health service is essential to enable higher productivity in an uncertain environment.

For a large number of countries, we augment the specification of import demand in NiGEM by accounting for different import contents of individual expenditure components. Three examples illustrate that these changes have important implications for model outcomes. In the case of the recently enacted US tax reform and in a ‘hard landing’ scenario for China, spillovers become more pronounced while the domestic effects turn out more muted than in the default specification. The reverse is true for the ramifications of a public investment push in Germany. Hence, we believe that our add-on to NiGEM can be a useful tool for robustness exercises, in particular for spillover studies.

This article looks at the likely future trends in home demand for four major electrical appliances—television sets, refrigerators, washing-machines and vacuum cleaners. The sales of all four have risen fast in the last decade (table 1, chart 1)—by an average of 16.5 per cent a year, taking all four together, compared with 2.2 per cent for total consumer demand.

Since our last forecast, the level of sterling and its future prospects have changed dramatically, with the effective rate rising by around 10 per cent. Early signs of a shift in sentiment towards sterling could be seen in the Autumn, with the rate against the D-Mark rising from 2.31 at the end of August to 2.46 at the end of October with smaller increases against the other currencies. At that time it was not clear whether the rise would be sustained. Now, towards the end of January, sterling stands at 2.70 against the D-Mark and 1.66 against the dollar, respectively 17 per cent and 6½ per cent higher than at the end of August.

Leading indicators are produced by both the OECD and the UK Office of National Statistics as tools for predicting turning points of the business cycle. An assessment on the basis of performance at turning points is frustrated by their scarcity. It is found that the indicators generally have significant (but not good) ability to predict changes in the direction of the variable they are intended to lead. When they are included in VAR models the standard error of quarter on quarter changes is generally lower than when pure autoregressions are used. However, the forecasting power of such equations is poor, and the general conclusion is that such indicators are not good forecasting tools.

The National Institute was founded in 1938, after a first initiative by Sir Josiah Stamp in the early 1930s. Stamp, who was the President of the London Midland and Scottish railway, had been connected with a Rockefeller Foundation scheme to provide fellowships in the social sciences; he became convinced that a wider attack was needed on the problem of financing the social sciences in Britain and his objective became the development of a central unit, of British origin, with funds under its own control. This would supplement and replace the help given by the Rockefeller Foundation (then the main source of research funds in the British social sciences) and develop an increasingly large research effort in economics and related subjects. Stamp made known his views and with the support of a number of prominent academics, in particular William Beveridge, Director of the London School of Economics; Henry Clay, Economic Adviser to the Bank of England; and Hubert Henderson, Secretary of the Economic Advisory Panel, began to search for British financial support.