However, the bout of rising inflation last year fed through in part to wages, highlighting the importance of reinforcing wage moderation. In fact, the inflation differential with the euro area, despite narrowing recently, has remained persistent. And that may pose a risk for future competitiveness. In the area of price formation, a cause for concern is the differences that continue to be seen in business margins, depending on whether industries exposed or not to competition are involved. In the former, mainly export-geared companies, the rate of change of prices has been virtually zero for over a year, reflecting the efforts exporting companies have to make to compete in markets experiencing a particularly delicate situation. In parallel, other industries less exposed to competition continue to increase their operating margins considerably. The Spanish economy’s resilience in the face of the adverse external environment in 2002 offers bright prospects for short- and medium-term developments, having placed it in a sound starting position for more dynamic growth as the international climate improves. However, the expansionary impulses stemming from EMU membership will tend increasingly to have a lesser effect, while the economy will have to address new challenges arising from the stiffer competition that EU enlargement will entail. Consequently, the growth pattern may not reside so much on consumption and construction but will have to be underpinned to a greater extent by investment and exports, meaning that dynamism will depend particularly on their profitability and competitiveness.
In this connection, the European Convention plans in the coming weeks to announce its proposed draft of the future European Constitutional Treaty, which shall be agreed at the Inter-Governmental Conference to be convened in 2004. As regards monetary policy, the ECB Governing Council has, with a view to adapting the operating arrangements of the euro area to the possible entry of new members, recently recommended changes in its voting procedures, in accordance with the provisions of the Treaty of Nice. The proposed Recommendation was approved by the European Council of 21 March 2003 and introduces a rotation system whereunder the number of governors entitled to vote at any one time is restricted to 15, divided into three groups on the basis of their voting frequency. Without delving into the details of the approved formula, I should like to stress that the criteria of representativeness used in determining the voting rights of each member of the Council will place the Governor of the Banco de España within the first group of Governors, who are authorised to vote in the ECB governing council most frequently, on an equal footing with Germany, France and Italy. The Spanish economy In an adverse external setting, the key characteristic of the period analysed in the Annual Report was the capacity shown by the Spanish economy to sustain a comparatively high growth rate of 2%, and to continue generating employment, which increased by 1.3%.