The economy is slowing as expected. NIESR's estimate of monthly GDP suggests that the rate of economic growth slowed from 0.3 per cent in the first quarter of this year to 0.2 per cent in the second quarter of this year (figure 1), the weakest rate of growth since the second quarter of 2001. Recent data on the state of the economy is mixed. Retail sales volume growth surged to 1.8 per cent per quarter in the three months to May 2008, up from a rate of growth of 1.2 per cent in the preceding three months. The index of production, however, recorded a fall of 0.5 per cent in the three months to May 2008. The index of services suggests services output growth has continued to be relatively subdued. The quarterly rate of growth in the three months to April was 0.3 per cent, half the rate of growth in the final quarter of 2007. While the retail sales data are not yet consistent with a consumer led slowdown, the decline of hotel and restaurant output in the three months to April suggests that other components of consumer spending are slowing.

World demand and production continued to expand strongly during the second quarter, though a little more slowly than before (table 14). Inflationary tendencies increased (chart 5).

In view of the abundant resources of coal in the United Kingdom, it was natural that at the time immediately following the first oil shock in 1973 certain hopes were pinned on coal: that coal usage would recover enabling the country to reduce its high reliance on oil. With the benefit of hindsight it is clear by now that whilst the importance of oil in our energy supplies has indeed been reduced, it was not primarily due to any resurgence of the demand for coal. The production and consumption of coal have continued to decline.

A few years ago, comparisons were being made between the recession of the early 1980s in Britain and that of 50 years earlier, in the 1930s. The latter was followed by a recovery in output which lasted over five years. A new recession appeared in 1938, but it was swiftly overtaken by growing rearmament and the outbreak of war. On this occasion, the recovery of output has already run for six years and, though there may well be more to come, we now have sufficient figures to make a worthwhile comparison of recession and recovery in the two periods. It is the strong similarity in the strength and depth of the two recessions which makes the comparison of the subsequent recoveries a useful measure of the success of recent economic performance. In terms of annual data 1929 and 1979 were the peaks of the preceding expansion, and we take advantage of the coincidence of the last digit. Those variables expressed in index number form are taken as 100 in the years 1925 and 1975, and we characterise the periods 1925-37 and 1975-87 as Then and Now. Data for Then are taken mainly from Feinstein (1972) and for Now from Economic Trends and other current official sources.

The latest set of official statistics and survey evidence suggests that activity remained subdued in the first half of this year, with the optimism apparent in post-election business and consumer sentiment proving to be ephemeral. However it is not unusual for there to be some delay before movements in survey responses are reflected in measured expenditure. On balance it does appear as if output has begun to stabilise and we expect a modest recovery over the second half of this year, although it is difficult to be confident about the pace at which the recovery will proceed. Any potential recovery is unlikely to prove sufficient to prevent a further year-on year fall in the level of GDP and the aftermath of the recession, in the form of rising unemployment, repossessions and business failures, can be expected to persist into 1993.

In 1946, when the Soviet economy was still suffering acutely from war damage, Stalin addressed a meeting in Moscow and announced some long-term economic targets : the aim, he said, was to treble the 1940 output of basic industries, and in particular to reach an output of 50 million tons of pig-iron, 60 million tons of steel and 60 million tons of oil. ‘This will take three five-year plans, or maybe longer’, he said, suggesting that he hoped to reach these goals in the early 1960s. Ambitious as his targets seemed at the time, they will in fact probably be exceeded by 1960—in the case of oil by a very wide margin. The period from 1946 to 1956 was one of exceptionally rapid growth. In the first years, the restoration of war-damaged productive capacity and reparations deliveries helped, but progress continued to be very rapid during the fifth five-year plan (1951–1956), when these factors were no longer important.

This note responds to the recent critique by Goodridge, Haskel and Wallis (GHW) of our 2012 study of Britain's productivity puzzle. We show that a correct reworking of the latest official data on changes in labour composition overturns GHW's main criticism. We also question the strength of the empirical evidence offered by GHW in support of their alternative explanations of the productivity puzzle.

The structural pattern of the economy is changing all the time. It has changed considerably in the past ten years (table 1), partly because of the emergence of oil production, but partly also because industries that previously constituted the mainstay of the UK economy—like steel, coal, textiles and mechanical engineering—have declined in importance whilst others, for example electronics and chemicals, have become the driving force of industry and certain types of services have grown out of all proportion to the national economy as a whole. This point can be illustrated by the fact that in the ten years to 1983 manufacturing output fell by 15 per cent, while at the same time the output of all services increased quite markedly and one section, banking, financial, business and professional services, insurance and leasing, grew by some 70 per cent.

This paper describes the Danish mortgage system by comparing it with the UK mortgage system. The Danish mortgage system has attracted attention in the literature on the design of mortgage systems. It is a type of narrow banking model where mortgage loans are financed by specialised institutions that issue bonds with cash flows that match that of the mortgage loans. Thereby, the Danish mortgage system outsources many of the risks that are usually kept on the balance sheet of banks to bond investors. Measured in terms of four criteria, the Danish mortgage system performed better during the financial crisis than the UK mortgage system. However, both in Denmark and the UK, alignment of the mortgage and the pension systems could offer significant advantages.

The world economy continues to face strong deflationary pressures at the present time. Whilst growth has remained above trend levels in North America, the Japanese economy has sunk further into recession, and there are increasing signs of an economic slowdown in Europe. Overall we expect GDP growth in the OECD economies to slow to around 1.8 per cent this year, from an estimated 2.4 per cent in 1998. Global demand as a whole remains relatively weak, with the growth in the volume of world merchandise trade estimated to have halved last year to around 5 per cent and projected to fall further to between 4-4½ per cent this year. Trade in Asia is estimated to have declined by 7½ per cent last year, with potentially serious consequences for growth prospects in economies such as China, Hong Kong and Singapore that have become increasingly affected by the regional economic downturn.

It is generally recognized that membership of the EEC would almost certainly mean for the United Kingdom the acceptance on the balance of payments of a substantial burden through the working of the Common Agricultural Policy. Part of this cost would take the form of higher import prices, as a result of buying food from other members rather than from cheaper sources outside the Community, and of direct contributions to the Community's Agricultural Fund; and part would result from the effects of higher prices for food on the general cost structure of the economy and hence on the competitiveness of exports. In addition, allowance must be made for the so-called ‘impact’ effects of tariff changes. Apart from the mutual reductions in tariffs between the United Kingdom and the Community's present members, the United Kingdom would in all probability forfeit the preferences over those countries which it now receives in the Commonwealth, EFTA, and the Irish Republic.

The July measures were followed by a halt to the increase in the gross domestic product and almost certainly by a slight down-turn. So far there is no indication of significant change in the balance of payments situation since the second quarter, although the measures halted speculation against sterling and have been followed by a renewed inflow of foreign funds. The world economic environment now seems somewhat less favourable to an improvement in the United Kingdom's payments situation than it did in September, in spite of the recovery in the United States. The main reasons for a more cautious prognostication now lie in a pause in the economic expansion of western Europe; this has contributed to the weakness of commodity prices and is therefore limiting the prospects for expanding exports to primary producing countries.