Furthermore, the use of flexible forms of work such as part-time and temporary 16 work may also provide further working incentives. High unemployment rates in the euro area and in particular unacceptable high youth unemployment rates clearly suggest the need to spur not only labour supply but also labour demand.
Finally, terms-of-trade effects stemming from the past appreciation of the euro should also positively affect real disposable income and thus facilitate a pick-up in consumption growth. Developments in financial markets are broadly consistent with the overall picture of a gradual resumption of economic growth. As compared with a few months ago, downside risks to the main scenario of a gradual recovery have clearly receded.