In a situation where business confidence - and therefore investment - was weak, that essentially meant stimulating consumer demand. It was not without risk - in terms of the build-up of household debt and of a possible house price bubble - but without it we, too, would have faced recession. Looking forward, there is a reasonable prospect that global demand will pick up gradually, and we may see a more sustainable pattern of exchange rates beginning to emerge with the albeit hesitant strengthening of the euro. There are in fact already signs that manufacturing output has started to recover. But there are downside risks to that prospect associated with the renewed volatility of international financial markets over the summer, which we are monitoring very closely. But abstracting from these recent global and largely cyclical, effects, the more fundamentally important point, looking further ahead, is the likelihood that we - alongside other countries - will continue to operate within a framework of overall macro-economic stability - as a necessary condition for the effective functioning of the market economy. Those presumptions may well mean that manufacturing continues its gradual, long-term, relative decline - as a share of total output, and in terms of the number of people employed - in all developed industrial countries, including the UK.
I have no doubt that the effort will prove to be worthwhile. 4  BIS Review 48/2001