In the four quarters from the end of 1979 to the end of 1980, industrial production fell 12 per cent and manufacturing 14 per cent. The average changes for the year were 8 per cent and 9 per cent. The largest previous post-war fall in manufacturing, in 1974-5, was 8 per cent over two years. In the first quarter of 1980 manufacturing output would, but for the steel strike, have been only slightly below the average level that had been maintained through 1977-79. In the subsequent quarters, excluding the recovery of steel output, it fell 6 per cent, 3 per cent and 3½ per cent (Statistical appendix table 2). There are only two manufacturing sectors in table 1 that do not show a decline for the year as a whole. It is essential to emphasise the unprecedented extent and size of this fall because individual industrial falls of 10 or 15 per cent can otherwise look like exceptional disasters, requiring special explanations and demanding special measures of assistance. Although there were of course influences that made the position of individual industries even worse than that implied by the general fall in demand (some of these are discussed in the next section), it is against the background of a general fall of 9 per cent that their relative importance must be measured.

Experimental reforms in the teaching of mathematics incorporating Continental teaching methods were begun in January 1995 in fifteen classes in six primary schools in the London Borough of Barking and Dagenham. The classes were visited in June 1996 by the Secretary of State for Education Mrs Gillian Shephard, by HM Chief Inspector of Schools Mr Chris Woodhead, and by the Opposition spokesman for education Mr David Blunkett; the media, including the BBC television programme, Panorama, provided accounts for the wider public. The reforms resulted from a wider research programme—comparing Continental and British productivity, education and vocational training—that has been under way at the National Institute for over a decade, by a research team led by SJ Prais; in recent years the research has benefited from close co-operation with the inspectorate and schools in Barking and Dagenham; this phase was funded by the Gatsby Charitable Foundation, to the Trustees of which—and especially Mr David Sainsbury for his personal encouragement—the Institute is much indebted. The commentary below outlines the background to these educational reforms, explains what has been done so far, and sets out for discussion some proposed next steps.

These price index numbers were introduced in the very first issue of the Economic Review in 1959 with the aim of illustrating the changes in the market prices of commodities exported by primary producing countries. The original system was revised in 1965; this note describes further major revisions.

UK national accounts statistics of government ‘output’ are based on inputs, especially employment; earlier UK conventions attempted to measure government output using statistics of activity (of the sort currently advocated in some quarters) but were dropped for reasons outlined below. The note provides some examples of revised activity-based ‘output’ measures and compares them with the old approach and with existing conventions. It concludes in favour of retaining existing conventions until more statistical research has been undertaken.

A fuller account of the issues, methodology and data summarised in this note is given in ‘Measuring output and productivity in government’ by M. S. Levitt and M. A. S. Joyce, NIESR Discussion Paper, no. 108.

This paper examines the effects of changes in Euro Area interest rates using macroeconomic models. It examines the results of a harmonised monetary policy simulation at the Euro Area level using the National Institute of Economic and Social Research's Global Economic Model (NiGEM) and the European Central Bank's Area Wide Model (AWM). Comparison is also drawn with the aggregate results from Euro Area National Central Bank models as reported in van Els et al. (2001). Overall, the results across the different models are broadly consistent with what might be regarded as the stylised facts of the monetary transmission mechanism. That is to say that, following a policy tightening, there is an initial fall in output consisting of a more pronounced investment response and a less pronounced consumption response. This output fall is accompanied by protracted price dynamics.

The short-term economic outlook has improved significantly in nearly all parts of the world economy over the past year. Growth has continued at a rapid pace in the North American economies, helped by the renewed vigour in equity prices in recent months and further strong growth in labour productivity. GDP in the United States is estimated to have risen by over 4 per cent in 1999, for the third year in succession. We expect to see further growth of 3¾ per cent this year. The European Union economies have embarked on a cyclical upturn, helped by accommodative monetary policies and the impact of improved external demand.

The breakdown of the communist regime in Eastern Europe marked a historical event for countries on both sides of the iron curtain. Applying the recently released EU KLEMS database on sectoral growth and productivity measures, we study the period after the transformational recession 1995-2004 for Austria, Czech Republic, Hungary, Slovak Republic, and Slovenia and compare the performance to a group of European core economies. Our analysis reveals pronounced differences in performance but also striking similarities in terms of industrial structure. Beginning witha brief account of aggregate growth and its components, the focus is then on specialisation patterns and the varying contribution of industries characterised by educational intensity. Fianlly, we investigate the manufacturing sector in more detail, demonstrating that the Eastern European countries sucessfully specialised in higher-tech sectors which might be explained by high productivity growth rates in these sectors.

Usually the main question about employment at the beginning of the year in Britain has been: ‘How big an increase in demand will the available labour supply allow?’ This year the question is the other way round: ‘How big an increase in demand is needed to bring down unemployment to a more normal level?’

The importance of the engineering industry to the United Kingdom economy is attested both by its absolute size (excluding vehicles, its weight in the industrial production index is currently 232 in 1,000) and by its contribution to visible exports (nearly 27 per cent by value in 1969). When it is also considered that engineering products make up a large part of manufacturers' investment in plant and machinery, and that the industry produces to order, it is apparent that an examination of this industry might yield some useful information for the Institute's forecasting work. In particular, the published figures of engineering orders on hand and net new orders and deliveries for both the home and export markets contain information relevant to forecasts for investment and exports. The difficulties of obtaining usable and reliable behavioural relationships for these two variables are well known—in the first case because of the importance of unquantifiabll ‘confidence’ considerations and in the latter because of the need to forecast economic factors and conditions in a large number of overseas markets.

In the period of floating exchange rates a distinct dollar—D-mark polarisation was noted, whereby periods of weakness for some European currencies relative to the dollar coincided with periods of strength relative to the Deutsche mark and vice versa. The relationship continued to be observed for those currencies such as sterling which remained outside the Exchange Rate Mechanism for most of the period. The observation, although more ‘an empirical regularity in search of a theory’ than a model (Buiter et al., 1998) seems reasonably robust; recently the dollar has fallen sharply against sterling while the euro has risen. An analysis of this relationship and its stability is important because it provides a guide as to how the euro might be expected to move against sterling as a part of any adjustment against the US dollar. In turn it sheds some light on the degree to which a dollar depreciation might affect Britain inside the Euro Area.

Towards the end of the 1970s there was a spate of work examining the saving ratio, prompted by the unforeseen rise in the personal sector saving ratio that occurred in the early 1970s.

Work absorbs a huge share of the lives of most people. It is the major source of income. How people fare at work, the conditions under which they work and the mechanisms for remedying problems at work impact subjective well-being, labour market behaviour, and mental and physical health. While economic analysis treats work as creating disutility, many people are workaholics for reasons beyond income, and one of the robust findings from the new economics of happiness is that unemployment is one of the major depressants of subjective well-being. The independent Strategic Review of Health Inequalities, headed by Professor Sir Michael Marmot, noted in its June 8, 2009 policy dialogue that “employment conditions influence health both directly and indirectly” and argued for structural interventions at workplaces, organisations and broader policies to make a significant contribution toward healthier work. As the world economy has fallen into a sharp recession, the increase in joblessness, potential delays of retirement due to reduced value of pensions, particularly in the private sector, and the probable intensification of work among those who remain employed can be expected to have major impacts on well-being and social behaviour. It is therefore timely to devote an issue of the National Institute Economic Review to work and well-being.

The transition to monetary union in Europe, which began formally when Stage 2 started in January 1993, is now well over half way to completion, according to the deadlines set in the Maastricht Treaty. The first decisions on Stage 3 are approaching fast, yet the prospects for its commencement are still very unclear, and many important practical and policy issues are still in doubt. This article provides an overview of the EMU debate, covering the latest developments on convergence (Section 1), the main institutional matters still to be resolved before Stage 3 begins (Section 2), the key problems awaiting policy-makers in Stage 3 (Section 3), and finally the controversy about the economic rationale of EMU (Section 4). It concludes that the UK Government was wise to defer a decision on whether to participate in Stage 3 until the implications became clearer, but that it would be unwise to abandon the option, which it presently risks doing, by design or default.