Mr. Sebastian Barnes:

I agree that sustainable growth is probably the main factor in ensuring the sustainability of the public finances. Were the economic model to change in a significant way, it is right that the Government would prepare for that, which may require public investment in all sorts of areas. These are definitely legitimate matters for the Government to think about. From our perspective, the point we are making is that the sustainability of the public finances is important as well, particularly in view of the fact that we have a very high debt rate or level of debt. One of the big risks is that there could be a shortfall in growth and one of the things that could drive that is a big contraction in FDI activities or if FDI activity were to stop all together. That is definitely a concern.

Our point on the spending side is that the issue is prioritisation. There is an amount of spending that is consistent with fiscal sustainability. That amount can be increased if taxation is increased in a way that matches but it is important to maintain the sustainability of the public finances. That may require prioritisation, either between tax cuts and spending or how much one increases taxes and adjusts spending. It may require prioritisation within spending, that is, orientating spending more towards things that will help to support growth, for example. The key message is that fiscal sustainability is very important and if money does need to be spent, whether on measures to help support growth, address climate change or tackle inequality, for example, that needs to be funded in a sustainable way. That is the key point and it requires prioritisation between the different policy objectives.