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adjustment agricultural aimed allocation Background and problems banks barriers benefits budget cent of GDP changes cial Closer Economic Relations competition policy continued controls corporate tax costs deficit deregulation developments and progress direct distortions domestic duced economic effects efficiency enhancing exemptions expenditure export favourable financial markets firms fiscal flexibility foreign foreign direct investment funds further action greater growth Iceland implemented important improve incentives income tax increase interest rates introduced investment labour market lower major marginal tax rates measures Member countries ment Moreover OECD OECD area OECD countries Overall pension privatisation programme promote protection public enterprises public sector Recent developments reduced regional regulations remains restrictions savings Scope for further social security strengthened structural reform taken tariffs tax base tax reform tax system tax wedge taxation telecommunications tion tive trade policy unemployed unemployment United Kingdom value-added tax wage