Recent signs that growth is slowing from above-trend rates are welcome as the economy is probably operating close to capacity. Future growth is likely to be less reliant on consumption and more driven by investment, with net exports being much less of a drag. Instability stemming from the housing market remains a risk, although it may be smaller than at previous house price peaks. The slowdown and continuing low inflation warrant a pause in monetary tightening, although further tightening may be needed during 2005, in particular due to increasing pressures from the labour market. The government deficit is likely to be above 3 per cent of GDP in 2004 and, in the absence of a spontaneous rise in taxes, additional action may be required to achieve a decisive and sustainable reduction. ...