.
THE RETURN TO STRONG GROWTH , WHICH WOULD BOTH CHECK THE EXPANSION OF UNEMPLOYMENT AND SPEED UP PRODUCTIVITY GAINS , WILL THUS DEPEND ON LOOSENING THE EXTERNAL CONSTRAINT , AND THIS MEANS A MORE RAPID ADJUSTMENT OF PRODUCTION STRUCTURES AND A SUBSTANTIALLY HIGHER RATE OF INVESTMENT OF A TYPE TO ENSURE SUCH ADJUSTMENT . IT WILL THEREFORE BE IMPORTANT FOR ECONOMIC POLICY IN 1985 TO STEP UP CONSIDERABLY THE EFFORTS ALREADY UNDERTAKEN IN THIS DIRECTION , AND TO AIM AT ACHIEVING A RECOVERY IN PRIVATE INVESTMENT , IN PARTICULAR BY FACILITATING A HEALTHIER FINANCIAL SITUATION AMONG ENTERPRISES .
THIS POLICY WILL HAVE TO BE PART OF A GENERAL DISINFLATION DRIVE THAT WILL BE EFFECTIVE ONLY IF IT IS GEARED TO REMOVING THE FUNDAMENTAL CAUSES OF RISING PRICES RATHER THAN TO CONTROLLING THE SYMPTOMS THROUGH ADMINISTRATIVE MEASURES THAT CANNOT EFFECT A GENUINE CURE , AND MAY , IN FACT , LEAD TO DISCRIMINATION AND DISTORTION . IT IS THEREFORE ESSENTIAL TO PLACE A DETERMINED CHECK ON THE DYNAMICS OF COST INCREASES AND TO REDUCE THE PUBLIC DEFICIT ; THE EFFECTS COMBINE TO BRING ABOUT A RATE OF MONETARY CREATION THAT IS INCOMPATIBLE WITH THE PROSPECT OF A RETURN , EVEN VERY GRADUAL , TO STABILITY .
CONSEQUENTLY , A RESTRICTIVE WAGES POLICY MUST BE RESTORED IN 1985 , FOR EXAMPLE , BY ADOPTING A NORMATIVE RATE FOR PAY INCREASES CORRESPONDING TO A PROGRAMMED RATE OF INFLATION . AS TO BUDGETARY POLICY , IT SHOULD AIM AT LIMITING NET CENTRAL GOVERNMENT BORROWING TO 9 % OF GROSS DOMESTIC PRODUCT , I . E . MORE THAN ONE POINT LOWER THAN THE EXPECTED 1984 OUTTURN . AS THE COST OF INTEREST MAY BE EXPECTED TO INCREASE SUBSTANTIALLY , AND AS THE BUDGET WILL BE CALLED UPON TO MAKE A FURTHER MAJOR CONTRIBUTION TO INVESTMENT , THIS AIM FOR THE DEFICIT WILL REQUIRE VERY STRICT MANAGEMENT OF OPERATING EXPENDITURE ON SERVICES , AND APPROPRIATE ADJUSTMENTS TO PUBLIC SERVICE CHARGES TO REDUCE THE REQUIREMENT FOR SUBSIDIES . IT WILL ALSO IMPLY A SIGNIFICANT REINFORCEMENT OF THE TAX PRESSURE , WHICH SHOULD HOWEVER COME FOR THE MAIN PART FROM MORE EFFICIENT MEASURES TO COMBAT TAX EVASION . INDEED , THE EXPECTED OUTCOME OF MEASURES TAKEN IN THIS AREA ALREADY COULD EVEN MAKE IT POSSIBLE TO REDUCE THE BURDEN OF PERSONAL INCOME TAX , WHICH WEIGHTS MOST HEAVILY ON WAGE AND SALARY EARNERS , AS A COUNTERPART TO RESTRAINING THE RISE IN REMUNERATION .
MONETARY POLICY SHOULD SUPPORT THE DISINFLATION DRIVE BY CONTINUING TO RAISE REAL INTEREST RATES ( WHICH RECENTLY RETURNED TO POSITIVE FIGURES ) , THUS ENCOURAGING THE TREND OF SAVINGS TOWARDS A LESS LIQUID STRUCTURE .
AS THESE VARIOUS APPROACHES TEND TO SPEED UP THE RETURN TO DOMESTIC BALANCE , THEY SHOULD , TOGETHER WITH THE HELP OF SUPPLY-SIDE MEASURE MAPPED OUT IN THE PLAN , ENABLE THE ECONOMY TO MAKE GOOD PROGRESS TOWARDS STRUCTURAL ADAPTATION . IT WILL NEED TO PERSEVERE ON THIS PATH WELL BEYOND 1985 TO RETURN GRADUALLY TO A