In line with end-year data releases we have revised a number of our medium term macroeconomic forecasts. In line with a higher than expected end-2007 unemployment figure of 8.0%, we have revised upward our jobless rate forecasts through to 2012.

Tax hikes will help the government to keep its budget deficit well below the 3.0% of GDP specified in the Maastricht convergence criteria. We forecast a 2.4% of GDP deficit for this year, but further improvement will be made more