Can Britain defy the economic gloom?

The continued slide in stock markets caps a week of grim economic news. Yesterday the FTSE 100 index suffered its biggest one-day fall in almost three years, and the losses there and on European markets have resumed today. This week has seen inflation and unemployment figures up, house prices falling, and German growth stuttering almost to a halt. How worried should we be?

Part of the instability is down to the continued eurozone crisis. Nobody believes that the Greek debt crisis is solved: despite more talks between the French and Germans, the most likely scenario is still that the eurozone countries will simply try to muddle through, albeit with the European Central Bank making large purchases of government debt from distressed countries. That is a course of action fraught with danger: there remains a real risk that the euro could break up, with huge potential damage.

Yet not all the woe can be laid at Europe's door. Markets are nervous about the weakness of the US recovery, in the wake of the US having its credit rating downgraded. As for other economies, there is a sense that there is not much left in the locker for the US government to use should the economy tip back into recession. Interest rates are already at historic lows, with the Federal Reserve indicating last week that rates will stay there for another two years.

Against this gloomy backdrop today's UK borrowing figures are a rare ray of hope: the Chancellor borrowed less than expected in July and is on course to do the same this month. In recent weeks there has been talk of Britain being almost a safe haven compared with the eurozone: the second quarter growth figures announced last month, while a feeble 0.2 per cent, were ahead of Germany or France. George Osborne's predicament remains extremely tough and our economy weak, but for the moment he is playing a bad hand well.

Today's suicide bomb attack on the British Council in Kabul is a chilling reminder of the Taliban's determination to cause terror. It shows - and was designed to show - that they remain capable of organising large-scale attacks in the heart of Afghan capital. If they can attack here, now, what will happen when the British and Americans withdraw?

At present both President Obama and David Cameron remain committed to pulling out all combat troops by the end of 2014. The beginning of the handover to the Afghan army has been marked by a series of attacks: just last month, both President Hamid Karzai's own half-brother and the mayor of Kandahar were assassinated in the southern city.

Meanwhile, earlier this month, 38 allied soldiers died when a US helicopter was shot down.

The worry for the remaining British troops is that, over time, their thinning numbers will come under greater pressure. Certainly they can hold the Taliban at bay: even at the end of next year, the US will still have 68,000 troops in Afghanistan, more than when President Obama took office. But for the Afghans, events like today's bombing make the 2014 handover date look increasingly ominous.

Education Secretary Michael Gove's plan to rank state schools by the numbers of pupils they send to Oxford and Cambridge sends the right message about aspiration. It is right that all state schools should aim high, striving to send pupils to Oxbridge and other leading universities.

Misplaced anti-elitism does state pupils no favours: competing with the best should be a badge of pride.