The recession in the UK is coming to an end, with a gradual recovery expected in the second half of the year. It now seems that stocks of goods and materials were run down sharply in the first half of the year. This is a common occurrence at the low point of the economic cycle, leading to a spontaneous upturn once the stock adjustment is complete.

This time the recovery is being helped by a rise in exports. Looking ahead to the first half of next year we expect the recovery to be reinforced by renewed growth in consumer spending, but we may have to wait rather longer for fixed investment to pick up as well.

Although the data for the recent past are still somewhat patchy at the time of writing, a limited turnaround in the non-oil economy can be expected in the third quarter of the year, accompanied by a recovery in North Sea output. We expect oil production in the latter half of the year to be some 10 per cent higher than in the first half, with the reopening of fields following installation of new equipment. Growth in the onshore economy is likely to prove hesitant, with the overall level of output in the second half of the year being little changed from that in the first.

Business cycle developments in the major seven economies have not been particularly well synchronised in the last two years. The US, Canada and the UK have been in recession, whilst Germany and Japan have been growing strongly. We are predicting that this asynchronicity will continue over the next eighteen months, with growth slowing in Japan and Germany whilst a mild recovery takes place in the English speaking world. However there are some signs that the recovery, at least in the US, is likely to be rather slower than we had anticipated in our August forecast. The Federal Reserve in the US has clearly been concerned about the most recent signals from the American economy, and it encouraged a cut in interest rates on 6th November. The Japanese authorities have also cut interest rates in this quarter, and we anticipate that there will be no substantial increases in German interest rates.

Since unemployment began to rise again last year, the need for a response from government is once again being discussed. As the unemployment total rises toward 2 1/2 million and threatens to continue to rise next year, it will be repeatedly in the headlines for some time to come. One policy response to persistently high unemployment in the UK, and by governments around the world, has been the use of Special Employment Measures. It is therefore surprising that direct special measures in Britain are now at a seven year low and are facing further funding cuts of around 18 per cent in real terms during the next financial year. Here we take a look at recent developments in Special Measures in the UK, and assess the adequacy of current programmes to meet the needs of the 1990s.

Economic convergence within the EMS member states is a precondition for further moves to economic and monetary integration. The Delors Report has set out a path toward EMU in three stages, where transition to the next stage depends on some degree of convergence being achieved in the previous stage. In October 1990, the European Council in Rome agreed that ‘in order to move on to the second phase (of economic and monetary union), further satisfactory and lasting progress toward real and monetary convergence will have to be achieved’ (Press communique, European Council, Rome, 28 October 1990). The draft treaty text for the Maastricht summit states that before the start of the second phase in January 1994, the council shall assess the progress made with regard to economic and monetary convergence, and in particular with regard to price stability and balanced public finances.

With completion of the EC internal market in sight and economic and monetary union by the end of the decade looking probable, concern about social and economic disparities within the European Community has been growing. In the single market, the intensification of competition can be expected to expose the weakness of regions in difficulty, while the transition to EMU will place considerable burdens of adjustment on inflation-prone economies. On the whole, it is parts of the Community which are already disadvantaged, such as Greece or the South of Italy, which are most vulnerable to these changes.

The aim of the study was to approach an assessment of the technological level of the economies in Eastern Europe, particularly in the newly-democratising countries—Bulgaria, Czechoslovakia, Hungary and Poland—by means of studying their innovative activity and productivity levels in comparison with the West.

The article examines the weaknesses and inefficiencies of the Soviet centralised planning system, and the means by which Gorbachev and his colleagues sought to reform it. Along with the objective difficulties in the way of ‘marketisation’ (lack of practical experience and market infrastructure, lack of agreement about the final objective of reform, obstruction by vested interests, ideological pre-conceptions, popular distrust), grave policy errors were committed (unbalanced budget, inflation ary money-creation, loss of control over incomes, reluctance to increase prices). Meanwhile the rise of natioralism, and the de-legitimation of the regime and of the Party, created a power-vacuum, which by 1991 made impossible the implementation of any policy. Disruption of inter-republican and inter-regional supply links, and drastic cuts in imports, are causing serious declines in production. The failed coup accelerated the process of disintegration.

This article analyses the current problems of the Soviet economy's reform process. The process of transition to a market economy in the Soviet Union, where an extreme degree of monopoly prevails, has been characterised by declining production and accelerating inflation. The rapid growth of the market sector in the situation of highly distorted and heavily regulated prices, dominance of state enterprises, and unclear property rights, leads to the concentration of entrepreneurial activity mainly in speculative operations involving the redistribution of state property, to the deterioration of the macroeco nomic situation and to the deepening of the structural crisis in the economy. In fact, the growth of the market sector is based mainly on hidden subsidies from the state enterprises.

The failure of four years of economic reforms is due to inappropriate economic policy based on mythical ideas about the market economy. Rapid, radical reforms, including large-scale privatisation on the basis of development of financial intermediates, are of crucial importance in overcoming the further deterioration of the economic situation and in preventing the collapse of the Soviet economy.