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.

Since the beginning of 1995 output has been growing at a quarterly rate of just under ½ per cent, slightly less than most estimates of the trend growth rate that the economy can sustain in the long run. As a consequence, there has been no progress in closing any pre-existing output gap. Over this period, there has been a lack of any domestically generated inflationary pressure. Indeed, if import prices had not risen sharply in 1995, the underlying rate of inflation would have remained below 2½ per cent.

It is now quite clear that growth slowed in Europe around the end of 1995, and that it remained low in the first quarter of 1996. However, the most recent information suggests that the slowdown is likely to prove temporary. Early indicators for the second quarter suggest that growth has begun to accelerate, much in line with our forecast published in May. We have made no further adjustment to our forecast for EU wide growth this year, with output still expected to rise by around 1½ per cent this year and around 2¾–3 per cent next year. Recent exchange rate developments should help support demand, as the D-mark, the French franc and other currencies within the D-mark bloc have all depreciated against the dollar in the last few months. A number of economies in Europe appear to have some spare capacity, and can increase output, whilst the US is operating at or above capacity, and a reduction in demand should ease incipient inflationary pressures rather more than it reduces output. The depreciation of the D-mark has been associated with a loosening of monetary policy, with short-term interest rates in Germany being a full point lower than they were a year ago. French short-term interest rates have fallen much more, reflecting the disappearance of a significant risk premium last year. The loosening of policy was timely, and should help offset the deflationary pressures that have come from a slowdown in stock accumulation in both France and Germany and from low investment, especially in Germany.

Arguably the biggest change in the nature even of market economies in the last hundred years has been the increase in the economic role of government. The activities and responsibilities falling under this head have varied with circumstances, but the most universal and consistent theme has been the growing prominence of government as a spender both on goods and services and on transfer payments to other economic agents. The objects o f government spending include the traditional collective products of the legal system, the civil service and the armed forces. They also include the major pillars of the welfare state—social security, health—care and education—as well as other items such as the transport and urban infrastructure, public housing and various forms of assistance to industry and agriculture. These wider objects of government expenditure are mostly popular with the electorate at large, besides being invariably supported by specific advocates and interested parties. Increases in spending are generally easier to bring about than reductions. At the same time, all these objects have to compete for approval and resources not merely with one another but with people's wish to retain as much income as possible for their own private disposition. Tax reductions are no less popular than increases in spending. This article discusses recent UK government policy towards public expenditure and taxation, and some of its impacts upon social welfare.

The United Nations is financed by an international tax on its member states which is supposed to be based on capacity to pay. The most practical measure of this capacity is Gross National Product in the most recent year for which data are available, converted to US dollars at market exchange rates. Several alternative tax bases have been proposed but most have theoretical or practical drawbacks. Although the UN's effective tax rate is very low, a case can be made for additional relief for poor countries; the appropriate extent of this is primarily a matter of political choice. The present method of calculation of contributions does not however provide a good measure of current capacity to pay, largely because a succession of ad hoc adjustments over the years have given excessive weight to out-of-date economic data.

Economists are often accused of being narrow specialists, unable to see how their particular area of expertise relates to wider issues. But there is a handful of economists of whom such statements could never be made. Among these is Professor James Meade, who sadly died in December 1995. James Meade was one of the outstanding economists of this century, and a hallmark of his work was a remarkable capacity to see the economy as a whole. He contributed to many fields, but these were not isolated forays. All that be wrote was illuminated by a comprehensive understanding of social and economic problems. What is more, be had a vision as to how social and economic institutions could be reformed to make the world a better place, and be believed in the power of rational argument as a means to bring about these reforms.

This article uses a vector autoregression (VAR) approach to identify the causes of the 1990-92 recession in the UK. The VAR approach is shown to be particularly pertinent for quantifying the relative magnitude of the different demand shocks, and in decomposing them into monetary and expectational factors. The main finding is that the recent recession was precipitated primarily by shocks to consumption, and that the prior monetary tightening and the subsequent collapse in the housing market explain just part of this contraction. Non-monetary shocks also appear to have played an important role in bringing about the recession. The VAR model also offers interesting insights on the nature of the recovery that is currently under way.