STRATEGY FOR PUBLIC FINANCES
29.
Before I describe in detail my strategy for the public finances, it is necessary for me to say a few words about the trend growth rate of GDP. As in last year's budget, I
5.5 per cent have assumed a trend growth rate of 5 in real terms for the forecast period. Whilst I accept that this may seem low when compared with two years of double-digit economic growth, the
negative growth experienced in 1985 is a salutary warning that
we should not be over-influenced by recent results.
Furthermore, I have already commented on the likely impact of
recent worldwide problems.
In the light of these
per cent considerations, I prefer to maintain the 5 trend growth rate
ap assumption for the purposes of this budget.
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30.
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In the context of the economic and financial
background I have just outlined, I shall now set the scene for
the measures I propose for 1988-89. It will be clear from all
that I have said so far that volatility and uncertainty continue to be facts of our economic life. Almost inevitably, we will
experience considerable year to year variation in revenue
dependent
is on. the performance of our economy.
Notwithstanding these swings in revenue, our aim is to maintain
stability in public expenditure growth. This strategy is
essential to the orderly and efficient development of government
services and the stability of our tax system. It is only through prudent and careful management, which involves looking
ahead a number of years, that we can ensure that the overnment's finances do not add to the innate volatility that
ic
affects our economy.
cap
17
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