The role of the UK Government in determining the macroeconomic environment in which the Executive operates is, therefore, of considerable importance. From a different perspective, there may be a need, where appropriate, to discuss with the UK Government how elements of its economic policies impact on the achievement of the Executive's vision. The UK Government policies that provide the fundamental macroeconomic policy context for the Scottish economy are now reasonably well established, operating through monetary policy and fiscal policy frameworks. A role for fiscal policy in the short-term is also acknowledged in UK Government policy. The extent to which these macroeconomic policies are successful in meeting their aims is highly relevant for the Scottish economy.
Scottish businesses benefit from stability in the domestic economy.
Moreover, the level of trade with the rest of the UK is considerable and it will be enhanced by sustained and stable expansions in overall UK demand conditions. Furthermore, the competitiveness of businesses in international markets, which is recognised elsewhere in this Framework as a crucial element in promoting the dynamism of Scottish enterprises, requires that UK macroeconomic policies succeed in achieving sustained low inflation. The enabling objectives for economic development also incorporate a number of elements operating through the UK tax-benefit system and other policies which are important to recognise here. These are primarily intended to improve the incentives for employment and, more particularly, to reduce the incidence of unemployment and poverty traps. Part of this set of initiatives is the replacement of the Family Credit system by the Working Families Tax Credit system which aims to improve the rewards from employment for families, where the tax-benefit system has tended to distort incentives.