These would lead all euro-area countries to introduce at home reforms experimented in another economy of the area that meet the following three criteria: first, they are the subject of a multipartisan consensus; second, they have been implemented on the basis of an agreement between the social partners; third, they have actually helped create jobs. The Council does not doubt the fact that France, like all the economies of the euro area, could benefit greatly from the extension of such consensual and effective reforms. The competitiveness of the economy Last, as it has done in each of the previous years, the Monetary Policy Council emphasizes the importance of cost containment in the economy and the need to provide an environment that favours the competitiveness of businesses. In Europe, before the single currency, any poorly conducted national economic policy was swiftly and severely punished by depreciation of the currency on the foreign exchange markets and rises in market interest rates. With the creation of the single currency, these indicators have disappeared along with the swiftly applied sanctions associated with them. In the new euro area, any economic policy errors leading to lost competitiveness would result, more slowly and insidiously, in weaker growth and job creation. For this reason, even more so than in the past, unit production costs and more generally the quality of the competitive environment of businesses need to be very closely monitored.
Mr Trichet presents the Annual Report of the Bank of France Address by Jean-Claude Trichet, Governor of the Bank of France before the President of the French Republic, Senate and National Assembly on the occasion of the presentation of the Annual Report, in Paris on 21/5/99. I am honoured to present you with the report on the operations of the Banque de France, monetary policy and the prospects for it, as required by law. As is the custom, I also submit herewith the Monetary Policy Council’s comments on the events of the past year, which was marked by the choice of the European Union Member States authorized to participate in Monetary Union and by the creation on 1 June 1998 of the European System of Central Banks. The upturn in growth that started in 1997 accelerated in 1998. Annual average GDP growth stood at 3.2%, after 2.3% in 1997 and 1.6% in 1996. In 1998, the expansion was fuelled by vigorous domestic demand, particularly household consumption. Furthermore, total investment, which had stagnated in 1997, posted a dynamic increase in 1998. By contrast, foreign trade made a negative contribution to GDP growth owing to the deterioration in the international environment. Although France was comparatively less severely hit by the spread of the emerging country crisis, the economy was affected by weaker demand from our main European trading partners. Thanks to faster growth, the French economy created 300,000 jobs in the non-farm market sector in 1998, compared with 196,000 in 1997.