View from City Road: Praise indeed for Mr Major

Support for John Major's beleaguered government sometimes comes from odd quarters.

One of them is the Organisation for Economic Cooperation and Development. We've already had the hors d'oeuvres - the OECD's jobs report, which judged the EU's social chapter to be a thoroughly bad thing. Now for the main course - an impartial analysis of the state of the nation. Apparently, things are not as bad as a whinging media makes them seem.

The OECD's report on the UK says big strides have been made in restructuring the economy. The labour market is one of the least regulated in the OECD. It is too soon to be sure, but the agency believes that stabilisation of wages combined with gains in productivity could signal a fall in the 'natural' rate of unemployment.

Greater wage flexibility and further improvements in education and training are needed to correct long-term joblessness, but the employment picture is none the less better than in many other countries.

There's high praise for the last two budgets, too. The OECD believes they have established the foundations for an enduring recovery that does not veer from boom to bust. The OECD also praises the new framework for setting monetary policy, though it admits it has yet to gain credibility in the markets.

As if that were not enough, the OECD even goes so far as to give qualified support for the reforms of the National Health Service, which it thinks a move in the right direction that should be given time to work. In one of the few objective analyses of NHS reforms, the OECD sees hope rather than deepening crisis. That contrasts with emotive domestic debate. It is far too soon to reach firm conclusions, the agency says, but initial research into the impact of reforms 'gives increasingly encouraging results'.

The organisation concludes that stable expansion provides the basis for further improving labour skills and undertaking microeconomic reform. Given all that, the country's economic performance and individual living standards stand a good chance of improvement. Well I never.