The UK economy now appears to be progressing along a path that is just consistent with the economic objectives of the government. Inflation is currently slightly above the 2½ per cent target, but stands a reasonable chance of meeting it by the end of the year. Government borrowing in the most recent financial year was above expectations, but could still satisfy the Maastricht fiscal criterion next year without further tax cuts. The government does not have an explicit, quantitative objective for economic growth, but this too is broadly acceptable at a current rate of expansion of 2 per cent per annum. Fears of an early recession now appear to be disappearing and growth looks likely to improve over this year and next.