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.
If we continue to make it higher and higher, we will, in fact, run into more worldly constraints – both financial and political ones. And, whether we like it or not, we are also changing the rules of the game in monetary union and might set incentives that lead to new problems in the future.