Economic policy and prospects

Abstract

We reprint below, in its entirety, the text of a speech given by the Government's Chief Economic Adviser in Washington on 23 September 1981 to the National Association of Business Economists. It is a remarkably lucid exposition of this Government's policies towards the economy in general and the public sector in particular, spelling out as it does the assumptions which underly those policies and which have led to the rejection of alternative strategies. Questions to which important clues are provided include:

• What are the mechanisms which are expected to lead the country out of the recession?

• How does fiscal policy ‐ and especially the size of the Budget deficit ‐ relate to the use of monetary targets in the short and medium term?

• Why has the Government decided to take on the public sector unions yet again?