BIS Review 11/2004  7  For the years to come, the European Commission has signaled the risk that the deficit may go above 3 per cent of GDP and the need, in the absence of structural measures to cut current spending, to raise taxes. The possibility of reducing taxes depends on achieving faster economic growth.
In the short term, support for domestic demand through public works programmes is necessary. The banking system, which has been greatly strengthened in the last decade by privatizations and extensive restructuring, is committed to sustaining firms that are sound and profitable but too small to confront today’s increasingly fierce international competition.