The structural reforms, that we are badly in need of, must be implemented as rapidly as possible if we want Europe to be up to its historical challenges. The Chinese say “It is later than you think” has never been so true. In any case, history itself does not wait for us. And when I look back, over the last twenty years, it seems to me that an unfortunately well-founded criticism could be that we have constantly under-assessed the rapidity of the stream of history: the rapidity of the deterioration of the situation in the USSR, the rapidity of the collapse itself, the rapidity of the enlargement process, the depth, the strength and the intensity of the “desire of Europe” which is spreading in the countries in transition. Second word: stability. Economic and financial stability, in a period of excessive volatility and of wide boom-bust episode, financial and real stability appear to be a very precious asset. Over the last twenty years, we have constructed a new world: technology has permitted instantaneous communication and incredibly powerful real-time computation. Globalization has created new cultural, conceptual, commercial and financial links between all economies including previously centrally planned systems; together technology and globalization are progressively driving us to a unified planet of universal rules and regulations, code of conduct and practices, market procedures and market instruments, accounting standards, etc.
In the year to the first quarter total output grew by just over 3% while prices rose by 2.7% measured by the overall GDP 1  BIS Review 50/2000  deflator or by 2.1% on the Chancellor’s RPIX target measure. That is the fifth time in the past seven fiscal years that output growth has exceeded the rate of inflation. Since the recession of the early 1990s both output growth and inflation have averaged around 2¾%. The number of people in employment - as we saw from yesterday’s figures - is at an all time high. The rate of unemployment, on a claimant count basis is as low as it has been for 25 years. And interest rates over the past few years have been more stable and just about as low as anyone can remember. Now it’s true that there are uncertainties ahead - as there always are - which could make for a bumpier ride. The welcome weakening of sterling - which had risen to quite unrealistic levels against the exaggeratedly weak euro - will tend to reverse the downwards pressure that it had previously been exerting on retail prices. Domestic demand growth will need to moderate to compensate for that although there are some tentative signs in the recent data that it may be beginning to do so. The sustained tightness in the labour market could still put upwards pressure on earnings growth and pay settlements - though the latest data are somewhat reassuring for the time being.