[2] Assumptions

We have attempted in this forecast to make our best guesses about the likely development of policy over the coming years rather than to assume ‘unchanged policy’. We assume that, at least until 1984, the broad framework of policy will be that provided by the Mediwn‐Term Financial Strategy, which provides a target for the growth of the money supply (ł M3) and a path for the PSBR. The forecast suggests that one objective of the MTFS, which was to reduce the PSBR as a percentage of GDP at market prices, remains feasible. However, we do not now expect the 1983–4 PSBR guideline of 2 per cent to be achieved until 1984–5, and we expect the growth of sterling M3 to remain outside the target range right through the forecast period, even though real interest rates remain positive.