Indeed, structural factors play a key role in the low prospects for growth. Calling for yet another reorientation of macroeconomic policies. Let me explain this in more detail in the remainder of this talk. Many countries have failed to adapt to the changing environment in recent decades, most importantly in terms of technological progress and globalisation.
In addition, the monetary union removed the exchange rate as an adjustment mechanism for member states. By 1999 it was clear that several member states needed structural reforms to strengthen alternative adjustment mechanisms, like wage and price flexibility. In practise, however, structural differences between EMU countries have not lessened, unlike in the rest of the EU.