##s, it will help to ease the exceptional pressures on the most internationally - exposed sectors, and contribute to a better balance within the uk economy. but it needs, of course, to be accompanied by corresponding moderation of the growth of domestic demand - after the offsetting stimulus of a year ago - if we are to maintain overall stability. that essentially is why interest rates have had to rise since last autumn. the broad prospect now for the uk economy as a whole over the next couple of years, which is the extent of our forecasting horizon, is one of continuing relatively strong growth, with continuing relatively high employment and continuing relatively low inflation. the monetary policy debate is a narrow one : it is about just how strong the growth, just how high the employment and just how low the rate of inflation. it is as good a prospect for the economy as a whole as we have known for some time. and much the same is true of the overall economy here in northern ireland. you know better than i do. but from the data, you, too, have enjoyed a sustained period of relatively steady growth - in fact you largely avoided the recession that hit the rest of the uk at the beginning of the 1990s. the number of people in employment here too is at its all - time high. and unemployment is at a 25 - year low. as far as i can tell - from the northern ireland economic research centre forecast of last autumn and from the regional cbi ’ s recent business confidence survey - that progress looks set to continue ; indeed you may well out - perform the uk economy as a whole. that is an encouraging macro - economic background to the challenges facing northern ireland ’ s new executive and assembly. huge progress has been made towards implementation of the good friday agreement since i was last here in belfast - the referendum, the elections and the introduction of devolved government. it is an immense tribute to the extraordinary efforts of the many people involved in keeping an inevitably difficult process on track. the economic prize of permanent peace and political stability is potentially very substantial. it will make northern ireland more attractive as a place in which to invest and in which to live and work ; it will make it more attractive, too, as a place to visit. and devolved government will allow the fundamental supply - side issues, which are what determine the underlying sustainable growth rate of the economy, to be addressed within the local community. that process has already begun with the report last year of the economic development strategy review steering

development in the exchange markets has been the disappointing weakening of the euro since its historic introduction at the beginning of last year. initially this appeared to be related to the impact of the global slowdown on some of the larger eurozone economies, which seemed likely to cause them to run further below capacity than had earlier been expected. but the more recent signs are that the eurozone economy is now picking up relatively strongly, and it is harder to understand the euro ’ s continuing weakness in the present context : it may just be a matter of time - for there is no doubt that the euro has considerable scope for appreciation. taken together, mr president, these various international developments since i was last here in belfast have greatly complicated the task of monetary management here in the uk - in fact it has been just about the most difficult external environment that i can recall. at that time monetary policy was still aimed at moderating the pace of domestic demand growth to prevent the re - emergence of inflationary pressure - including wage pressures in the labour market. we actually raised rates by ¼ % to 7½ % shortly after my visit - but i promise you that was not a direct result of my visit here. but we reversed engines fairly aggressively when evidence of the effect of global slowdown on our own economy began to appear in the autumn - cutting interest rates from 7½ % to 5 % between october 1998 and last summer. you might have supposed that this would have weakened the exchange rate, shielding us in some degree from weakening external demand growth - but not a bit of it - the exchange rate actually strengthened! but the easing of monetary policy may have helped to reverse the sharp fall in domestic confidence evident throughout the uk economy in the second half of 1998, and to avert the widely predicted slide into recession. in any event, after coming to a virtual stand - still in the fourth quarter of 1998, the economy as a whole bounced back last year, driven largely by domestic demand growth. and, for the economy as a whole, we can now, since 1992, point to the longest period of sustained low inflation - averaging 2. 7 % on the government ’ s target measure, with relatively steady annual growth averaging 2. 8 % - well above most estimates of our long - term trend rate, together with a sustained rise in the number of people in employment - to an all - time high and an almost continuous month - by - month fall in the rate of unemployment to the lowest rate for about 20 years. but if the