For this response to be effective, it must be accompanied by national economic policy responses befitting the European action and the challenges we face. This response calls for the following: to maintain the support of fiscal policy to the economy, on a temporary basis, focusing on the groups of firms, sectors and individuals most affected and with a design that allows for the structural adjustments needed; to convert the European funds into a fiscal impulse that accompanies and steers the recovery effort of our productive system; to urgently implement an ambitious, comprehensive, lasting and assessable strategy of reforms that tackles the structural challenges of our economy; and, finally, to design a medium-term fiscal consolidation programme, for gradual implementation once the economic crisis caused by the pandemic is behind us, that ensures the sustainability of our public finances and enables fiscal buffers to be built up for use in future recessionary episodes. The future well-being of our country depends on an economic policy strategy that combines these principles. Thus, as I have stressed on other occasions, there should in my opinion be a high degree of consensus among the various political, economic and social agents regarding the guiding principles of this strategy, so that the foundations on which our growth rests are predictable and lasting. Thank you. 12
Meanwhile, we expect underlying inflation to remain close to the target rate of 21/2% - though perhaps a little above that rate during the course of next year. Now no-one likes to see the economy slowing down, but some slowdown was necessary at this point in the economic cycle in order to avoid an inflationary upsurge. And if in fact it proves to be as mild as most of the forecasts - including our own - suggest, it will be a huge improvement on anything we have seen at this stage in the cycle for decades. BIS Review 98/1998  -4-  It is true of course that the economy may turn out to be weaker than in our central projection. That projection is the MPC’s very carefully considered view as to the most probable outcome, but there is considerable uncertainty around it; and the risks are somewhat more on the down than on the upside. We don’t have a crystal ball. And we don’t pretend to know at all precisely just how things will in fact turn out - that’s why we publish our forecasts in the form of a fan with a wide range of uncertainty around the central case. The people to watch out for in this field are those who do claim to know precisely.