Without aiming to be exhaustive, I should like to highlight some of the key priorities for reform in three main areas, namely: •  Getting more people into work,  •  Increasing competition,  •  And finally, supporting an innovative environment. Getting more people into work First of all, well-functioning labour markets are indispensable in fostering higher economic growth. The differences in labour market developments, especially with regard to the level of labour utilisation, between the US and Europe has prompted some economists to suggest the existence of a “European model” and a “US model”, related to the trade-off between labour and leisure 6 . One view is that the lower levels of GDP per capita in Europe reflect a European preference for more leisure time. However, we should bear in mind that lower participation rates are not necessarily associated solely with personal preferences, but are also triggered by the legal and regulatory environment, tax systems and social institutions. Necessary measures to increase labour utilisation or labour supply include the reform of tax and benefit systems in order to increase incentives to work. The use of flexible forms of work such as part-time and temporary work may also provide further working incentives 7 . 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. There is a need to reduce labour market rigidities restricting wage differentiation and flexibility.
Unfortunately, Member State's implementation record of Internal Market legislation is worsening and the number of Internal Market infringements remains stubbornly high in some European countries. Let me also briefly mention labour mobility. Labour mobility is an essential element of the Internal Market and an important factor of adjustment mechanism in a context of monetary union. Evidence however suggests that, overall, cross-border labour mobility is still low in the euro area. And we still have formal barriers to labour mobility across the euro area. This is in clear contrast to the situation in the United States 10 . All in all, increasing product market competition and labour mobility – at the EU and national level, would enable more efficient production structures associated with a more competitive price setting. Following the principle of “an open market economy with free competition” is pivotal to fostering long-term economic growth. Let me now focus more specifically on the financial sectors. Financial integration is indeed of key importance for the ECB, given the relevance for the conduct of the single monetary policy. The process of European financial integration is gradually taking place and considerable progress has been made for instance in capital markets and wholesale banking. However, the retail banking sector appears not yet to have reached its potential, and competition seems insufficient in this area leaving European consumers unable to take full advantage of the benefits of the EMU and the Single Market 11 .