Economic growth remained relatively subdued in the second half of last year, at around ½ per cent per quarter. However, this is faster than in the first half of 2005 (see figure 1). Over the year as a whole the economy expanded by 1.7 per cent in 2005. We expect economic growth to accelerate in 2006 and 2007 to around 2¼ and 2¾ per cent per annum respectively.

Since 1998, fiscal policy in the UK has been guided by two rules: the golden rule to borrow over the economic cycle only to invest, such that the average annual surplus on the public sector current budget as a share of GDP is greater or equal to zero; and the sustainable investment rule that public sector net debt should not exceed 40 per cent of GDP over the economic cycle.

Since the last NIESR forecast in October the Government Actuary's Department (GAD) has released new projections of the UK population. In comparison to previous projections these show substantial upward revisions to growth in the population of working age and to total population growth from 2005 to 2007. From 2008 and onwards there have been smaller upward revisions. Figure 1 illustrates the profile for growth in the population of working age implied by both the GAD 2003-based and the most recent GAD 2004-based mid-year projections.

Recent data on the UK balance of payments suggest that the deficit is deteriorating, and this may lead to downward pressure on the exchange rate. Of course some of the recent deterioration is due to temporary factors, such as the need for expensive gas imports and the inclusion of the estimated payment of insurance claims by Lloyd's of London due to Hurricane Katrina. However, there are some structural factors to look at. In this note we explore the effects of globalisation on UK trade and draw some conclusions for the UK economy. We first discuss European integration and its possible effects on trade, after which we look at changes in the world trading environment, both in terms of regulations and also in relation to technology. We then turn to estimating relationships for exports and imports. The level of exports and the degree of import penetration in the economy depend upon the level of world activity, the nature of the goods produced in the UK as compared to those demanded by consumers, the price competitiveness of UK products and the general trading environment facing the economy.

The paper argues that in the early years field England has started a process of change from what is termed a ‘childcare discourse’ to a ‘pedagogical discourse’, the former representing a fragmented approach to services for children, the latter the sort of integrated and holistic approach to which the Every Child Matters policy aspires. It considers the experience of countries which have already made the turn to a pedagogical discourse, what this change might mean in the area of school-age provision and the barriers to England completing the process of change, which requires restructuring to be grounded in rethinking.

Childcare provision in the UK has evolved alongside the expansion of mothers' employment, transforming the experiences of successive generations. This paper reviews some mixed evidence on child outcomes of maternal employment and offers a detailed examination of the working mothers' use of childcare. In particular, it looks at the differential use of formal and informal childcare provision using the first survey of the Millennium Cohort Study, which is compared, as far as possible, with evidence from the earlier birth cohort studies in 1970 and 1958. The affordability and trustworthiness of formal childcare remains a constraint on its use and indirectly on labour supply for some mothers.

Men are a small minority of childcare workers, and this has contributed to skills shortages which have affected the sector's ability to meet rising demand. The paper looks at current initiatives aimed at recruiting men, particularly through the Government's National Recruitment Campaign, and the benefits which might be gained from their inclusion in the workforce. It explores the barriers to men's employment in the sector, including men's own perceptions of gender roles and attitudes towards ‘women's work’. The paper identifies a range of measures which might lead to greater effectiveness in both recruiting and retaining men to the sector.

Using a unique data set from the US to examine the association between employment stability and childcare stability, we find that childcare use is fairly stable for current and former welfare recipients. In addition, although childcare instability contributes to employment instability, it does not appear to be the major reason women leave their jobs. In this case, employment retention programmes in the US, while not losing focus on childcare issues, should also address other barriers to keeping jobs, such as limited education and lack of work experience.