Product and labour markets must possess sufficient adjustment capacity to buffer shocks while maintaining high output and employment. It is in this area that progress is most needed. As I have indicated, much work remains to be done – in both the current and prospective members of the euro area, and both individually in each EU member, and jointly across Europe.
This topic is also attracting considerable attention in the media. Three themes emerge when people look at these issues. The first is that Australia will most likely face an extended period of prosperity in the years ahead. Some of this will come about through strong real economic growth, due, for example, to increased investment and higher export volumes.