The success of the reforms will indeed hinge on perseverance – as no reform has a one-year pay-back – and on their overall consistency, as all reforms are in a close interaction. Let me start first with the interaction between the public debt, efficient public spending and the tax system. Although some progress has already been achieved, structural public finance reforms are still needed. Thanks to the strong economic growth in 2017, the headline deficit fell below the 3% threshold, reaching 2.6% of GDP, and finally complies with the Stability and Growth Pact deficit rule. A tax reform was voted last Fall, lowering the tax burden on companies and on capital: the corporate tax rate will gradually fall from 33% to 25% in 2022 and personal capital income will be taxed by a flat rate from 2018. And last week, the French government published its revised medium-term targets: the public deficit is projected to turn into a slight surplus by 2022, while the public debt-to-GDP ratio – which reached 97.0% of GDP in 2017 – would decline by almost 8 percentage points at the same 5-year horizon. This ambition is very welcome but the better-thanexpected results of 2017 should not make us complacent about the remaining challenges. Even with favourable cyclical conditions and persistently above-trend GDP growth forecasts, the success of the consolidation strategy will depend on capping public spending growth.
So, it should be no surprise that our focus is on three things: first, full, consistent and prompt implementation of the already agreed reforms across the financial system, and here I would note that the largest single activity for the PRA this year is to complete the implementation of Solvency 2 for insurers for the end of this year, something I believe we are on course to do; secondly, finalising the design of the remaining post-crisis reforms and thus providing the much needed clarity around the future regulatory system; and thirdly, scanning the horizon for new risks and vulnerabilities that appear on our landscape, ones such as the risk of cyber disruption. I think there is solid evidence of progress in all of these three areas. Internationally, there is plenty of evidence of shared objectives and effective co-operation among national authorities to solve common problems and “own” and thus implement the resulting reforms. An example  BIS central bankers’ speeches  1  over the last year has been the building of strong working relations between the PRA and our colleagues at the Single Supervisory Mechanism of the ECB. This can only be for the good, and represents the much needed close working of people who are on the front line supervising the system. We also want to encourage sound market-based finance and we are, for example, strong supporters of the EU initiative on simple, transparent and standardised securitisation.