Notwithstanding the rise in the value of the euro, the stimulus from a more strongly growing global economy was driving euro area growth. The scenario which appeared to be unfolding at that stage was one where stronger export growth would generate a recovery in production. This would stimulate investment and would be followed, in turn, by a pick-up in consumer spending.
Although this recovery scenario remains broadly in place, progress has been slow. While we have seen an externally-led rebound which has boosted industrial production and helped generate some rebound in investment, the recovery has not yet become broadly based. In particular, domestic demand remains subdued.