BY 1987 . IN PURSUING THIS OBJECTIVE , HOWEVER , IT IS IMPORTANT TO MAINTAIN AN APPROPRIATE BALANCE BETWEEN TAX INCREASING AND EXPENDITURE CUTTING MEASURES GIVEN THEIR RESPECTIVE ECONOMIC COSTS . RECENT BUDGETS HAVE STRESSED LARGE INCREASES IN THE LEVEL AND SCOPE OF TAXATION , WHILE THE CURRENT LOW LEVEL OF ACTIVITY REDUCES TAX BUOYANCY ; THIS SUGGESTS THAT A NEW GENERAL INCREASE IN TAXATION WOULD NOT BE APPROPRIATE IN 1984 , BUT THAT ATTENTION SHOULD NOW BE DIRECTED AT ACHIEVING SIGNIFICANT REAL CUTS IN EXPENDITURE . PRESSURE ON SCARCE EXCHEQUER RESOURCES IS LIKELY TO CONTINUE , PRINCIPALLY BECAUSE OF THE CONTINUING HIGH LEVEL OF INTEREST CHARGES ON THE ACCUMULATED NATIONAL DEBT AND INCREASING DEMAND FOR SOCIAL EXPENDITURE . GREAT EFFORTS ARE THEREFORE NECESSARY TO REDUCE BOTH CURRENT AND CAPITAL SPENDING PROGRAMMES . IT WOULD SEEM APPROPRIATE TO REDUCE THE EXCHEQUER BORROWING REQUIREMENT IN 1984 BY 1 TO 1,5 % OF GDP BY REFERENCE TO THE LIKELY OUTTURN FOR 1983 AND ON THE BASIS OF THE CURRENT BUDGETARY DEFINITIONS .
IT IS OF FIRST IMPORTANCE THAT THE AUTHORITIES CONTINUE AND INTENSIFY THEIR EFFORTS TO ACHIEVE WAGE MODERATION . THIS IS SIGNIFICANT NOT ONLY FROM THE POINT OF VIEW OF CONTAINING PUBLIC EXPENDITURE , OF WHICH WAGES COSTS FORM A MAJOR PART , BUT ALSO FROM THE POINT OF VIEW OF PROTECTING EMPLOYMENT .
MONETARY POLICY IS DESIGNED TO SUPPORT THE ADJUSTMENT BEING PURSUED THROUGH FISCAL POLICY , WITHOUT ITSELF IMPARTING AN INDEPENDENT AND ADDITIONAL DEFLATIONARY BIAS TO MACRO-ECONOMIC POLICY . GIVEN A FAVOURABLE EXTERNAL ENVIRONMENT , CONTINUED SUCCESS IN CURBING DOMESTIC INFLATION AND IN REDUCING THE CURRENT EXTERNAL DEFICIT MIGHT FACILITATE SOME FURTHER LOWERING IN INTEREST RATES . AT THE SAME TIME , AN IMPORTANT CONTINUING CONCERN IS TO FINANCE AS LARGE A PROPORTION AS POSSIBLE OF THE EXCHEQUER DEFICIT FROM DOMESTIC SOURCES .
EFFORTS TO EASE THE LABOUR MARKET PROBLEMS MORE DIRECTLY IN 1984 SHOULD CONCENTRATE ON IMPROVING THE FLEXIBILITY OF THE LABOUR MARKET AND ENCOURAGING THE ENDING OF OVERTIME WORKING WHILE GIVING SPECIAL ATTENTION TO YOUTH UNEMPLOYMENT .
TABLE 9
IRELAND : MAIN ECONOMIC AGGREGATES , 1961 TO 1984 ( SEE OJ )
IN ITALY , NEW TAX PROVISIONS AND PUBLIC SERVICE CHANGES INTRODUCED AT THE BEGINNING OF THE YEAR AND THE DIFFICULTY IN REACHING NEW NATIONAL LABOUR AGREEMENTS HAVE TENDED TO KEEP DOMESTIC DEMAND AND ACTIVITY WEAK , THE ONLY DYNAMIC FACTOR BEING THE MARKED IMPROVEMENT IN EXPORTS . THIS HELPED TO RESTORE EXTERNAL BALANCE WHICH SHOULD BE MORE OR LESS REALIZED FOR THE CURRENT ACCOUNT BY THE END OF 1983 . IT HAS ALSO SLOWED INFLATION DOWN CONSIDERABLY , AND THE AVERAGE MONTHLY RATE IS EXPECTED TO BE LESS THAN 1 % IN THE SECOND HALF OF THE YEAR .
FROM NOW ON , THE VARIOUS DEMAND COMPONENTS SHOULD TEND TO EXPAND AND ACTIVITY SHOULD STRENGTHEN . THE EXPECTED RECOVERY OF CONSUMPTION , WHICH SHOULD CONTINUE INTO 1984 , COULD HAVE BEEN STRONG ENOUGH TO INTERRUPT THE CURRENT BUT AS YET INSUFFICIENTLY MARKED TREND TOWARDS RESTORED