To support the stability of the financial system, the ceiling on the deposit guarantee scheme has been raised and the government has introduced a scheme to guarantee bank liabilities. A fiscal deficit has emerged as revenues have slumped. Fiscal policy should be allowed to support demand in the near term but once the recovery is underway substantial measures will be needed to restore medium-term sustainability. Competitiveness needs to be improved; the outline national pay agreement may help but more is required to boost competition in network industries (telecoms, energy, etc) and sheltered service sectors.