But, for what it is worth, the Monetary Policy Committee’s view – described in considerable detail in our recent quarterly Inflation Report, which I can make available to you for a remarkably modest fee if you care to get in touch with me afterwards – is that while we will  BIS Review 19/1999  6  not see much growth in the first half of this year – certainly in the internationally-exposed sectors of the economy – overall output growth will pick up on the back of stronger domestic demand as we move towards the Millennium to around trend or above from the second half of next year. We can’t of course altogether rule out an actual downturn in total output over the next few months, though the odds are against that for the economy as a whole. And we are reasonably confident that the slowdown will be relatively mild and short-lived – certainly compared with equivalent periods in the past, for example at the beginning of the 1980’s and 1990’s. The good news is that we expect inflation to remain close to the Government’s 2½% target over the next two years, which should allow the relatively steady growth we have seen in the overall economy since 1992 to resume on a sustainable basis. Within this overall picture, we are still confronted with the difficult problem of imbalance between external and domestic demand and the sectoral and regional stresses that this implies.
Not only because of the obligation arising from the Treaty of the European Union. Rather because euro area membership provides ultimate monetary and economic security for our nation that is already used to the “de facto membership”. Competitiveness in today’s world Ladies and Gentlemen let me now turn to the topic of today’s conference: competitiveness in today’s world. I would like to look at it from the perspective of a really small country. As we all know, globalization has changed the understanding of success factors for countries. Oldstyle economic policies and market protection are of no use any more, since today whole factories and industries are moved within a short time. How can a small country survive in this world at all? It is often said that real wages should be kept artificially low to attract investment and provide high returns on capital. I do not think this is the right way for a small country. We could never compete with major economies when it comes to mass production. Instead, we should make use of the fact that globalization creates also a huge spectrum of niche markets. Mass production cannot meet countless individual needs, as people all over the world demand more and more personalised products and services. This is the key to success for smaller economies. BIS Review 63/2007  1  The point of departure for a society to remain competitive is to get over the fear of globalization. The new world is after all an opportunity, not a cause for sorrow.