We present a spectral-finite-element approach to the 2-D forward problem for electromagnetic induction in a spherical earth. It represents an alternative to a variety of numerical methods for 2-D global electromagnetic modelling introduced recently (e.g. the perturbation expansion approach, the finite difference scheme). It may be used to estimate the effect of a possible axisymmetric structure of electrical conductivity of the mantle on surface observations, or it may serve as a tool for testing methods and codes for 3-D global electromagnetic modelling. The ultimate goal of these electromagnetic studies is to learn about the Earth's 3-D electrical structure. Since the spectral-finite-element approach comes from the variational formulation, we formulate the 2-D electromagnetic induction problem in a variational sense. The boundary data used in this formulation consist of the horizontal components of the total magnetic intensity measured on the Earth's surface. In this the variational approach differs from other methods, which usually use spherical harmonic coefficients of external magnetic sources as input data. We verify the assumptions of the Lax-Milgram theorem and show that the variational solution exists and is unique. The spectral-finite-element approach then means that the problem is parametrized by spherical harmonics in the angular direction, whereas finite elements span the radial direction. The solution is searched for by the Galerkin method, which leads to the solving of a system of linear algebraic equations. The method and code have been tested for Everett & Schultz's (1995) model of two eccentrically nested spheres, and good agreement has been obtained.