Hong Kong must consider radical solutions to its fiscal deficit, which is expected to be confirmed this week as a structural problem, according to experts.
'The whole saga of the fiscal deficit is just killing Hong Kong - it's making Hong Kong less productive,' said Steve Xu, head of Asia economic research for SG Securities.
Mr Xu's comments came ahead of this week's report by a Government task force, which has examined the nature of Hong Kong's persistent deficits in recent years.
High-level leaks from the SAR Government recently said the committee would find the deficit - estimated to top HK$60 billion this year - was caused by structural problems in the economy and would persist even when economic conditions improved.
'There has been a lot of emphasis on tax revenue and [the need to cut government] expenditure, but I think we should really look beyond that to what has happened to the spirit of free economy which had made Hong Kong the envy of other economies. Unfortunately, that has been eroded over the past few years,' Mr Xu said.
'I would focus on [the Government's] policy blunders in the housing market and the labour market.
'The deterioration of the fiscal deficit [estimated by SG Securities at HK$70 billion this year] is more to do with domestic issues in Hong Kong than September 11.'