signs of improvement. the supply of homes for sale has decreased considerably in the last nine months, and although this does not reflect higher turnover, it may well help to stabilise prices. in our forecast, we assume that the tide will turn in the 2nd half of the year, and prices will begin to rise moderately. prices are estimated to be slightly below their equilibrium level, based on the current low interest rates. the future development in prices is subject to much uncertainty. interest rates on home loans are presumably lower in denmark than anywhere else at the moment. the low interest rates generally help to buoy up the housing market. for buyers this means that with a fixed - rate loan the “ housing burden ” is now below its long - term average. if they opt for a variable - rate loan instead, the housing burden is very low at present. this is likely to attract more buyers. * * * if we take a bird ’ s eye view of the danish economy and compare ourselves with other countries, we can see, on the one hand, that we are not among those most severely affected by the crisis. on the other hand, we too need to fix a few problems. our financial sector is undergoing an adaptation process in response to the financial crisis. new rules have been introduced, and the defences have been strengthened. structural developments are affecting the sector and will do so for some time to come. as i see it, a serious and targeted effort is being made, and the sector will emerge from this process strengthened – so that it will take more to shake its foundations next time a crisis hits us. but we have some way to go. bad loans still dampen earnings. danish firms are challenged by weak demand, a high level of costs and a trend in productivity which is on the low side in an international comparison. if the output gap, i. e. the excess capacity in the danish economy, is to be closed, these issues must be addressed. this cannot be achieved overnight. the business sector focuses much on what others can do, including on borrowing options. i am fully aware that some firms have difficulty in convincing their banks that it makes sense to lend them more money. but in general, firms are saving up and do not see finances as an impediment to production. bis central bankers ’ speeches i would also like to make it clear that, in danmarks nationalbank ’ s opinion, the framework conditions for funding the corporate sector should be based on market solutions

the weak economy pushes up unemployment in many countries. total euro area unemployment now exceeds 11 per cent of the labour force. but there are wide variations, from 5 per cent and falling in germany to 25 per cent and rising in spain. weak activity and anchored inflation expectations mean that underlying inflationary pressures are low in most member states. i am pleased to note that the european debt crisis is being addressed through a combination of national measures and support from the community. after all, the many summits and ministerial meetings show that the relevant member states are not left to fend for themselves, taking initiatives that could be detrimental to others. furthermore, we should not underestimate the highly developed cooperation between central banks and supervisory authorities worldwide – ranging from specific, coordinated measures to the development of rules and exchange of experience. this provides useful transparency as a basis for our own decisions. bis central bankers ’ speeches * * * obviously, denmark is not unaffected by events in the rest of the world. there is a direct impact via trade, as well as an indirect impact via expectations for the future. economic activity in denmark has stagnated over the last 18 months. the reason is that consumers and firms still keep a tight rein on spending. the consumption ratio is low and the investment ratio even lower, while the savings surplus is unusually high. this should be viewed against the backdrop of considerable loss of wealth in the wake of the financial crisis, which has by no means been restored. add to this a subdued trend in disposable income and, not least, low consumer and investor confidence. the high household savings entail a large consumption potential, which can be unleashed when confidence returns. exactly when this will happen is difficult to predict. in our most recent forecast, we assume that private consumption will pick up a little over the coming year. on the basis of a very weak 1st half, we estimate output growth at only 0. 3 per cent this year, rising to just over 1. 5 per cent p. a. in 2013 and 2014. but this will all depend on when confidence is restored and the private sector begins to convert some of its savings into consumption and investment. presumably the situation in the housing market will have to improve first. since statistics denmark began to publish monthly statistics of house prices last autumn, the figures initially published have consistently been a little lower than the final figures. with this in mind, we have seen a stabilisation of prices over the last six months – and the first tentative