Material on other Treasury matters can also be found at this address. The macroeconomic situation is favourable, but there is a need to reassert the medium-term cast of policies. Recent economic performance has been enviable. Since 1992, output growth has rebounded, unemployment declined markedly, and inflation been brought to the lowest levels in a generation. While growth slowed over the past year, this was mainly owing to the more pronounced slowdown in neighbouring countries.
Economic prospects are likewise favourable.
The hesitation in growth of the past year should soon give way to above-potential rates bringing further declines in unemployment. Underpinning this prospect is the expected acceleration in consumer spending in response to tax cuts, reductions in interest rates, rising real earnings and house prices, and windfall gains. Investment and exports should also firm. Growth of some 3 per cent next year seems reasonable, with the risks tending to be on the upside. This generally positive picture is marred, however, by the increasing slippage in the public finances.