V.  Policy responses  To sum up, sizeable and protracted ULC growth in a member country above the euro area average is very likely to be accompanied by a commensurate higher and persistent inflation and a loss of competitiveness that will eventually adversely affect its current account position, economic activity and employment.
The available evidence supports this conclusion, although the exact timing and the dynamics of the inevitable economic 4  BIS Review 99/2007  adjustment to reverse a significant cumulative loss of competitiveness cannot be predicted with precision, since other factors and processes also influence the economy’s dynamic behaviour.