An economic or financial policymaker without credibility, history tells us, ceases to be a functioning policymaker. Removal of the veil, breaches of the social contract, leaves the economy and financial system vulnerable. There is no single measure, nor quick fix, for closing these twin deficits with the general public. The supply chain for secret sauce, of building and restoring trust and understanding, is long and arduous. Nonetheless, it seems clear that increased engagement between policymakers and wider society is a necessary ingredient for its manufacture. From other spheres, such as medicine, we know that trust and understanding are built on everyday engagement. For the Bank of England, with the scars of the financial crisis still healing, the case for continuing to build those foundations is strong. 2  Haldane (2017a). The RSA call these benefits improved “agency” among citizens. Tetlock and Gardner (2016). The RSA call these benefits improved “efficacy” of policymaking. Botsman (2017). 5 See, for example, the Edelman Trust Barometer. The RSA call these benefits improved “legitimacy” of policymaking. 3 4  3  All speeches are available online at www.bankofengland.co.uk/speeches  3  The Means  If the case is strong, how best is this citizen engagement to be achieved? The RSA report provides a nice framework for addressing this question. This is based on the “ladder of participation” model, devised 6  originally by Sherry Arnstein in the late 1960s. The rungs of the engagement ladder are, in ascending order: inform; consult; involve; collaborate; and empower.
6 The projected reduction in the workingage population will translate into slower economic growth and will, therefore, negatively impact tax revenues, at the same time as the fiscal burden of a larger population of elderly people increases. The Commission calculates that by 2015 the share of age-related spending in GDP is expected to reach 20.1 per cent, two percentage points up from 2007, mainly due to the increased cost of pensions and healthcare, and will continue to rise thereafter. The fiscal correction required to bridge the implied sustainability gap clearly cannot be achieved without a culture change regarding the welfare state. Put simply, it needs to be understood that you cannot give away what you do not have. We must, therefore, adopt a more cost-efficient approach to the provision of public goods and services, whereby only those demonstrably in need would benefit. Access to social benefits, healthcare and subsidies should be streamlined through a combination of means testing and market-based mechanisms. In addition, the benefits structure could be further refined beyond the recent Budget measures with a view to making work pay and reducing the disincentives to enter the labour market. Conclusion The Maltese economy is experiencing its first major test since it adopted the euro. While membership of the euro area has provided a degree of protection during the crisis, in particular exchange rate stability, the road ahead is still fraught with challenges.