The economy is set for recovery, supported by improving financial conditions, an expansionary monetary policy and stronger international growth. However, the pick-up will be slow with GDP projected to grow by slightly more than 1% in 2010 reflecting strong headwinds from balance sheet adjustments, a still weakening labour market and fiscal tightening. In 2011 the recovery will gain momentum, but resource utilisation will remain low and the unemployment rate is projected to reach 9.5%. Inflation is likely to remain below the 2% target for an extended period.

On 27 May 1882, The Times newspaper proclaimed, "Today we have to record such a triumph over physical difficulties, as would have been incredible, even unimaginable, a very few years ago". They weren't talking about Queen Victoria avoiding a recent assassination attempt by a poet she'd annoyed or Jesse James having less luck with a friend he'd trusted. They were talking about sheep meat.

The economy is in a severe recession, with output projected to decline by 4.3% in 2009 and recover only mildly in 2010. The financial crisis has severely impaired the supply of credit and house prices have fallen sharply, thus restraining business and household spending.

Economic conditions have deteriorated markedly and forward-looking indicators suggest a further sharp weakening in activity over the next quarters. The adjustment in the construction sector is expected to continue, while house prices are likely to fall further. These factors, combined with turmoil in the banking and financial sectors, are already cutting domestic demand. Growth may resume only in late 2009. Unemployment is set to rise rapidly, but should stabilise in 2010. Inflation should recede, reflecting the recent falls in energy and food prices and the increasing output gap.

You rightly point out that “the supply of medical staff reflects global movements of labour” (No 262, Databank, July 2007). But many of us might disagree with your upbeat headline: “Healthy immigration”. In a report published in 2005, the Royal African Society argues that while recruitment of African medical professionals has shored up western health services, it has left the health sector in sending countries facing permanent crisis or even complete collapse.

GDP grew at an above-trend pace of close to 3% through the first three quarters of 2007. However, growth is expected to be weaker in coming quarters, as both investment and consumer demand are likely to be damped by much weaker activity in the housing market, together with tighter credit conditions. Consumer price inflation has dropped sharply and is expected to remain close to the 2% target over the next two years.

A basic problem with delivering a better higher education system is funding. Since the Second World War higher education, just as secondary and primary schools, has been considered as a public good, and so in most OECD countries the service had to be delivered free of charge to students through taxation. However, tighter public budgets and stiffer global competition for talent have led to a renewed interest in student fees as a possible way of raising more funding. The issue poses several tricky challenges, about access, equity, student finance, debt, and so on. Little wonder the debate has become rather heated in several countries.