BIS Review 6/2008  1  Recently, incoming information has suggested that the baseline outlook for real activity in 2008 has worsened and that the downside risks to growth have become more pronounced. In particular, a number of factors, including continuing increases in energy prices, lower equity prices, and softening home values, seem likely to weigh on consumer spending as we move into 2008.
Should the public deficit be increased, just in order to push through a structural reform like this one? This is an important debate, but it’s also important to draw a distinction between countries.