THIS RESPECT . MEANWHILE THE RISKS OF UNDUE TRANSITIONAL DEFLATION OF REAL DEMAND , UNDERSTANDABLY FEARED IN THE PROCESS OF DISINFLATION AND LABOUR COST ADJUSTMENT , CANNOT BE RULED OUT . IN THIS CASE , FINANCIAL POLICY INSTRUMENTS SHOULD BE USED TO OFFSET THE NEGATIVE EFFECTS AND ENSURE THAT THE TREND OF NOMINAL GROSS DOMESTIC PRODUCT CONFORMS TO ITS DESIRED TRAJECTORY .
4 . SUMMARY AND CONCLUSION FOR POLICY IN THE PERIOD AHEAD
THE EUROPEAN BUSINESS RECOVERY HAS NOT MATERIALIZED IN THE COURSE OF 1982 SO FAR , AND RECENT INDICATORS SHOW SIGNS OF A RELAPSE OF BUSINESS CONFIDENCE . ABOUT HALF OF THE COMMUNITY ECONOMY REMAINS AFFLICTED BY SERIOUS DISEQUILIBRIUM PROBLEMS AS REGARDS INFLATION , THE BALANCE OF PAYMENT AND PUBLIC FINANCE ; ALMOST ALL MEMBER STATES ARE EXPERIENCING GRAVELY HIGH LEVELS OF UNEMPLOYMENT .
THE PROSPECTS FOR NEXT YEAR ARE GOVERNED BY CONFLICTING INFLUENCES . THERE HAS BEEN AN EASING OF WORLD VARIABLES SUCH AS THE PRICE OF OIL AND RATE OF INTEREST , BUT STEPS MUST BE TAKEN TO AVOID THESE TRENDS BEING REVERSED IN THE EARLY STAGES OF AN UPSWING . THE PROSPECTS ARE HOWEVER FAR FROM BEING REASSURING , AND THE RISK OF A DEFLATIONARY SPIRAL MUST NOT BE EXCLUDED . ALL MUST BE DONE TO DISSIPATE RAPIDLY THE PRESENT PESSIMISM .
THESE PROBLEMS MUST BE COUNTERED BY ATTACKING THE STRUCTURAL WEAKNESSES OF THE EUROPEAN ECONOMY , AND ARE REFLECTED ESPECIALLY IN A LOW PROPENSITY OF THE PRIVATE SECTOR TO INVEST AND INCREASE EMPLOYMENT . THESE WEAKNESSES ARE ALSO MANIFEST IN MUCH OF THE COMMUNITY IN AN INBALANCED DISTRIBUTION OF RESOURCES BETWEEN THE GOVERNMENT AND PRODUCTIVE SECTORS , OF INCOME BETWEEN WAGES AND PROFITS , AND OF EXPENDITURE BETWEEN CONSUMPTION AND INVESTMENT .
REVERSAL OF THESE IMBALANCES WOULD SEEM TO BE THE INESCAPABLE COMPONENT OF A STRATEGY TO RETURN TO AN ECONOMY WITH HIGHER EMPLOYMENT , INVESTMENT AND PRODUCTIVITY ; INDEED THESE ENDS HAVE TO BE THE COUNTERPART AND JUSTIFICATION OF SEVERE INCOME AND PUBLIC FINANCE ADJUSTMENTS . POLICY AND CONCERTATION BETWEEN THE SOCIAL PARTNERS HAVE TO BE CONCERNED WITH ASSURING THAT THE COMPLETE PROCESS MATERIALIZES .
MANAGEMENT OF THE PROCESS OF SIMULTANEOUS CYCLICAL AND STRUCTURAL RECOVERY IS EXTREMELY DIFFICULT . NOTHING CAN RELIEVE EACH COUNTRY FROM ITS OWN EFFORTS , BUT TAKING INTO ACCOUNT THE INTER-DEPENDENCE OF ECONOMIES AND THE PRESENT INTERNATIONAL SITUATION , A SECOND OBJECTIVE MUST BE PURSUED WITH DETERMINATION : IMPROVEMENT OF ECONOMIC POLICY COORDINATION AMONG THE INDUSTRIALIZED COUNTRIES IN ORDER TO INCREASE THE CHANCES OF SUCCESS .
INTERNATIONALLY THE COMMUNITY SHOULD CONTINUE IN ITS EFFORTS OF PERSUASION THAT POLICY IN THE MAIN INTERNATIONAL RESERVE CURRENCY CENTRES SHOULD BE ACTIVELY CONCERNED TO AVOID EXCESSIVE FLUCTUATIONS OF INTEREST AND EXCHANGE RATES . TO THIS END IT IS NECESSARY TO MAINTAIN EFFORTS TO ORGANIZE A REAL INTERNATIONAL MONETARY COOPERATION BETWEEN THE PRINCIPAL MONETARY AUTHORITIES . THE STABILITY OF THE WORLD FINANCIAL SYSTEM REQUIRES THAT THE INTERNATIONAL CURRENCIES BE MANAGED WITH THIS EVIDENTLY IN MIND , AND THAT AGREEMENTS ARE NOW PROMPTLY REACHED BETWEEN