The importance of making fundamental reforms to public expenditure is increasing. As Chapter 1 illustrates, the widening deficit is reflecting strong increase in spending as a share of GDP against a relatively flat revenue profile. Looking forward, rapid growth in the number of old people in coming years will increase spending on pensions and boost demand for health care. In addition, the authorities must ensure appropriate investment in public infrastructure and make sure that sufficient funds are being spent on education and training to bring goals of developing a highly skilled and adaptable workforce to fruition. These spending pressures have to be addressed in an environment...