These are uncomfortably high levels and I have expressed my concern in this regard on various occasions. Excessively high rates of expenditure growth will ultimately impact on domestic inflation, although the timing and extent of these effects are at times uncertain. These developments will remain an important focus of our monetary policy deliberations. My concern, however, extends beyond simple monetary policy considerations.
Over three quarters of the thirteen countries’ imports from Europe consist of manufactured products; these imports account for about half their total merchandise imports. Trade among the countries of the area is limited. There are intense migratory movements from these countries to Europe, owing to their closeness and, above all, as a consequence of the large differences in per capita incomes and living standards.