The economy is now operating at close to trend levels after 5 years of recovery from the deep recession at the beginning of the 1990s. Over this period output has grown by an average annual rate of 2.9 per cent but growth accelerated last Autumn to around 1 per cent per quarter, a rate well in excess of that which is sustainable in the long run. The key question at the current conjuncture is whether the necessary slowdown in the rate of growth will come about quickly enough that inflation remains under control or so abruptly that the economy is pushed back into another recession.

Global activity continued to gain momentum in the early months of this year, helped by above trend growth in the North American economies. There was also a temporary acceleration in the growth of consumers' expenditure in Japan prior to a rise in indirect taxes in April. Total output in the OECD economies is estimated to have risen by 0.9 per cent in the first quarter of the year to a level 2.9 per cent higher than a year earlier. Output in the NAFTA member states rose by 1.4 per cent, and was over 4 per cent higher than in the first quarter of 1996. Conditions appear to remain favourable for steady growth through the remainder of this year, with OECD GDP projected to rise by 2¾ per cent in 1997 and 2½ per cent in 1998.

The recently published results of mathematics tests set to representative samples of pupils in over forty countries provide an important opportunity to re-assess priorities for reforms in English schooling. Five Western European countries—Austria, Belgium, France, Netherlands, Switzerland—are suggested in this critical study as providing appropriate standards for England's immediate aims. Attainments there are shown to be about a year ahead of England for average pupils at age 14; the gap is larger for those of below-average attainment, suggesting some structural bias in English schooling. The gap is particularly evident in those arithmetical fundamentals which need to be mastered by all school-leavers (rather than in advanced aspects suitable only for mathematical specialists); and that gap has its clear origins at the primary level of schooling.

The recent change of government brings to an end a sustained attempt to transform British industrial relations by legislative action. This article explores the consequences. It explains the cumulative effect of the legal changes since 1979, including the growing influence of the European Community, and examines the economic and social results. While legal intervention has had an impact on the institutions of industrial relations, most notably in reducing the power of organised labour, this cannot be isolated from wider structural changes in labour and product markets. A review of research on economic outcomes suggests an uneven and tenuous link between institutional change and economic performance.

Cyclical indicators have hitherto been used as a means of describing the state of the economy on a month by month basis. However, they have proved unsatisfactory for a number of reasons and are now no longer published. This paper summarises a means of producing monthly estimates of GDP from existing monthly data. The technique can be used to extrapolate as well as to interpolate monthly data and therefore provides an indicator of the current state of the economy.

This article analyses the properties of five leading macroeconometric models of the UK economy, in the light of the current discussion of monetary and fiscal policy-making. In simulation experiments, the interest rate and the basic rate of income tax are used to target the inflation rate and to ensure fiscal solvency. Our results show that monetary shocks soon affect the response of quantity variables, and fiscal shocks have monetary consequences, thus the operation of monetary and fiscal policy cannot be separated. Although the Bank of England's view is that it takes two years for monetary policy to have its maximum effect on inflation, our results show that this depends on the approach taken to the modelling of expectations.