An additional source of drag has come more recently from a significant slowdown in business investment which is in large part related to lingering uncertainty and a steep decline in global trade growth.7 The medium-term outlook for potential output growth could be more positive if tighter labour markets do eventually lead to wage increases and incite more investment in productive capital, and if there are major advances in technology that we have not yet imagined.8 Without a meaningful rebound in productivity, population aging will lead to even lower potential growth than in past decades.9 Natural by-products of slower potential growth are not only weaker corporate profits and dividends, but also a lower average rate of return on investments.
First, the failure to fulfil fiscal Maastricht criteria could derail the entry to EMU. Second, reasonably sound public finances are crucial for an effective and exhaustive use of structural EU funds. At this point let me make a few remarks on the Stability and Growth Pact.