Assessment and Recommendations
I. Macroeconomic Performance and Prospects
-Output: Imbalances Have Built Up
-Low Unemployment
-Inflation Was Subdued, But Has Picked Up Recently
-The Near-Term Outlook and Risks
II. Macroeconomic Policy
-Monetary Management
-The Fiscal Stance
III. Raising Productivity to Enhance Potential Growth
-Building Up Human Capital and Raising Work Incentives
-Enhancing Innovation and Competition
-Improving Financial Intermediation
IV. Managing Public Expenditure
-Trends in Public Expenditure and Forces Shaping Them
-Implementing the New Budgetary Framework: Progress to Date
-Involving the Private Sector in Public Services
-Mobilising Sub-Central Governments
-Summing Up
Annex I. The Foot-and-Mouth Crisis
Annex II. The Pound's "Fair Value"
Annex III. The Reverberations of the Oil Price Shock
Annex IV. Asset-Based Welfare
Annex V. Interaction of Some Benefit Expenditures
Annex VI. The Medium-Run Framework for Fiscal Policy: Some Theoretical Considerations
Annex VII. Reforming the National Health Care System: Recent Progress
Annex VIII. Calendar of Main Economic Events