Importantly, also, a more efficiently functioning economy will utilise the resources available to a greater extent and, in doing so, will be less prone to inflation. This extends the boundaries within which all economic policies, including monetary policy, can operate without generating inflation. In effect, the economy will have a higher growth “speed limit” i.e.
it will be able to grow faster before inflation is likely to become a problem. The structural reform agenda, set out in the Lisbon Strategy of 2000, aims to improve the functioning and flexibility of euro area product and labour markets. This is to be achieved through raising employment rates, education and skills levels and promoting technological innovation.