Softening economic growth and the slowdown in the housing market mark a turning point for fiscal policy. Strong revenue growth in earlier years financed a sustained expansion of government spending and some cuts in tax rates, while still allowing the government to run a substantial fiscal surplus. This left the public finances in a healthy state with net government debt declining to a very low level. But this benign picture is changing as growth slows and tax receipts increase more slowly. Public spending growth needs to slow. The challenge is to improve public services further without large increases in resources. In these circumstances, it will be even more important to get better value from public spending and to accelerate public management reforms.