Business and labour will be challenged by the need to be realistic about the painful adjustment ahead, without undermining our collective ability to respond to the recovery in demand when it arrives.
The more that the domestically-generated part of the economy’s cost structure can be kept under control, the less pressure there will be for the burden to show up in reduced employment and output. Banks also will need to play their part. Lending policies have turned conservative and cautious, which is normal banking behaviour in risky times.