PROVIDE ROOM IN THE PUBLIC BUDGETS FOR EXPENDITURE TO PROMOTE ECONOMIC GROWTH THROUGH INVESTMENT .
THIS MEANS CHANGING TRENDS EVIDENT IN RECENT YEARS . WHILE PUBLIC EXPENDITURE IN THE COMMUNITY HAS INCREASED TO A RECORD LEVEL IN PROPORTION TO GDP , AN INCREASING PART OF THIS EXPENDITURE HAS BEEN ALLOCATED TO A FINANCING OF CONSUMPTION EITHER DIRECTLY IN THE FORM OF PUBLIC CONSUMPTION OR INDIRECTLY THROUGH TRANSFERS TO FINANCE HOUSEHOLD CONSUMPTION . SUBSTANTIAL SUBSIDIES OR CAPITAL TRANSFERS TO INDUSTRIES IN DIFFICULTIES HAVE ALSO BEEN GIVEN PRIORITY AS STOP-GAP MEASURES TO PREVENT LAY-OFFS OR CLOSURES , ALTHOUGH THIS OFTEN IMPLIED SUPPORTING LOW-PRODUCTIVITY ENTERPRISES , AND BLOCKING NECESSARY STRUCTURAL CHANGES .
PUBLIC INVESTMENT AND OTHER CATEGORIES OF NON-OBLIGATORY EXPENDITURE HAVE , ON THE OTHER HAND , BEEN SEVERELY RESTRICTED IN ORDER TO MAINTAIN THE OVERALL BUDGET DEFICIT WITHIN LIMITS COMPATIBLE WITH MONETARY AND FINANCIAL STABILITY . MOREOVER , DESPITE A NEED FOR A REVIVAL OF INVESTMENT AND A STRENGTHENING OF BUSINESS CONFIDENCE , TAX SYSTEMS ON THE WHOLE MAINTAIN A COMPARATIVELY HEAVY TAX BURDEN ON ENTERPRISES . SIMILAR REASONS EXPLAIN WHY BUDGETARY MEASURES AIMED AT GRANTING TAX RELIEF FOR ENERGY SAVING INVESTMENT AND STIMULATING RESERARCH AND DEVELOPMENT , AS WELL AS CAPITAL TRANSFERS AND GRANTS TO PROMOTE THE EXPANSION OF PUBLIC UTILITIES AND COMMUNICATIONS OFTEN REMAIN SEVERELY RESTRICTED .
THUS THE STRUCTURE OF PUBLIC EXPENDITURE AND TAXATION NEEDS TO BE TWISTED STRONGLY IN FAVOUR OF ACTION TO INCREASE PRODUCTIVE POTENTIAL , IMPLYING THE NEED TO CURB THE AUTOMATIC GROWTH DYNAMICS OF WELFARE AND CONSUMPTION EXPENDITURES , AND RIGOROUSLY CUTTING DOWN SUBSIDIES WHICH NO LONGER CORRESPOND TO PRIORITY ECONOMIC NEEDS . SIMILARLY PRICING POLICIES IN PUBLIC ENTERPRISES SHOULD REFLECT FULL ECONOMIC COSTS . THE PURE MACROECONOMIC , CYCLICAL DEMAND MANAGEMENT FUNCTION MUST BE MORE CONSTRAINED . THE OBJECTIVES OF EMPLOYMENT AND GROWTH HAVE TO BE PURSUED FROM WITHIN THE GIVEN BUDGETARY AGGREGATES BY THE CHANGING OF PRIORITIES AT THE LEVEL OF INDIVIDUAL EXPENDITURE PROGRAMMES AND FISCAL INSTRUMENTS .
PROGRAMMES FOR INVESTMENT BY PUBLIC AUTHORITIES AND PUBLIC UTILITIES TAKE TIME TO PREPARE , AND EXPERIENCE HAS SHOWN , AT LEAST IN SOME MEMBER STATES , THAT THE LACK OF MATURE PROJECTS AND DELAY OF ADMINISTRATIVE PROCEDURES OFTEN EXERT A MORE EFFECTIVE CONSTRAINT UPON INVESTMENT ACTIVITY THAN THE AVAILABILITY OF FUNDS . MEMBER STATES WHICH DO NOT ALREADY POSSESS A CERTAIN RESERVE OF PROJECTS MIGHT NOW THEREFORE USEFULLY TAKE STEPS TO SPEED UP THE PLANNING OF INVESTMENT PROGRAMMES - NOT LEAST IN THE CASE OF PROJECTS ELIGIBLE FOR COMMUNITY FUNDS OR OTHER FINANCIAL ASSISTANCE . IN THE COURSE OF THE NEXT HALF-YEAR IT WILL BE EVIDENT WHETHER ACTIVITY WILL RECOVER SUFFICIENTLY FIRMLY . THE GREATEST NEEDS FOR PUBLIC INVESTMENT NOW TYPICALLY EXIST IN SUCH FIELDS AS ENVIRONMENTAL IMPROVEMENT , URBAN RENEWAL AND ENERGY SAVING IN HOUSING .
( E ) ENERGY POLICY
ENERGY SUPPLY IS AT PRESENT A MAJOR CONSTRAINT UPON ECONOMIC GROWTH . THIS HAS LED THE COUNCIL , ON 13 MAY 1980 , TO ADOPT NEW ENERGY POLICY TARGETS FOR 1990 AS FOLLOWS