tradition in science and innovation. indeed, europe is the birthplace of scientific inquiry. and, it is fitting that some of the most influential scientists of the 20th century, john von neumann and leo szilard, men whose contributions ushered in the computer and nuclear age, hailed originally from our host city budapest. this tradition provides a solid foundation to build on. high - profile joint undertakings such as cern can play an important role in pooling european resources to advance basic or fundamental research. such endeavours can also spawn unexpected by - products. for instance, the world wide web came to being at cern. however, even more important than large european projects, is that we put in place conditions that allow and encourage private companies and public sectors to embrace new technologies. this means that we need to equip all european citizens with the skills that they need to cope with the rapidly changing world. population ageing requires increasing public sector efficiency in general, large public sector employment tends to crowd out employment in the private sector, thus distorting the allocation of labour input in the economy. similarly, a large public sector can be a drag for productivity growth. even though it is difficult to measure productivity in the public sector, in aggregate terms it appears to be lower than in the rest of the economy and in particular in the open sector, and grows more slowly. the question of how to minimise these negative aspects of a large public sector, becomes all the more pressing with an ageing population. in finland we face the most rapidly ageing population, so these are no longer hypothetical questions but a reality that policymakers must deal with today. the demand for welfare and health services increases as the population grows older, and at the same time, the room for financing extra expenditure by higher taxation is limited because of an already high level of taxation and increasing tax competition. how can we ensure that the public sector in general and welfare services in particular can adapt? one way, the applicability of which varies from case to case, is to expose part of the public services to private competition. another way is to focus on measuring performance of the public sector and put in place appropriate incentives to respond to change. the public sector needs also to be more responsive to its " customers " needs. too often bureaucracies forget that they ultimately exist for the benefit of their customers. the customer - oriented approach is not only essential for ensuring efficient delivery of public services. but, perhaps more importantly, the public sector

. expressing this outlook in terms of the median of individual policy board members ’ forecasts, japan ’ s real gdp growth rate is projected to be 2. 3 percent for fiscal 2012 and 1. 7 percent for fiscal 2013. the year - on - year rate of change in the cpi is expected to be 0. 3 percent and 0. 7 percent for fiscal 2012 and 2013, respectively. looking at the current state of japan ’ s economy, while the pace of recovery in overseas economies has been slower than expected in the april 2012 outlook report, domestic demand in japan has been relatively stronger, and therefore japan ’ s economy as a whole so far is generally in line with the forecast in the april outlook report. c. uncertainties about the outlook the outlook i have just mentioned is the scenario for economic activity and prices considered to be the most likely by the bank, or the baseline scenario. in the april 2012 outlook report, the bank raised the following four risk factors concerning this outlook as warranting attention : developments in overseas economies, especially the european debt problem ; uncertainty with regard to reconstruction - related demand ; possible changes in firms ’ and households ’ medium - to long - term growth expectations reflecting the shift of production sites to overseas as well as problems concerning the supply and demand of electric power ; and problems regarding japan ’ s fiscal sustainability. at present, the chief concern is developments in overseas economies, especially the european debt problem. tensions in global financial markets rose rapidly in the second half of 2011, but eased somewhat from the start of 2012 due to the massive liquidity provision by the european central bank ( ecb ), in addition to the decision on the second financial support program for greece by the european union ( eu ) and the international monetary fund ( imf ), bis central bankers ’ speeches the signing of the european fiscal compact by eu member states, and the agreement to raise the lending capacity of the european financial stability facility ( efsf ) and the european stability mechanism ( esm ). from february to march 2012 in particular, sentiment in global markets was “ risk on, ” leading to purchasing of stocks and selling of the yen. however, market sentiment thereafter shifted gradually to a “ risk off ” mode and risk aversion among global investors has been increasing again as a result of growing concerns about the political situation in greece, as well as the health of spanish banks and the consequent deterioration in spain ’ s fiscal condition. yields on government bonds issued by countries with debt problems have