since the financial crisis has been disappointing. lately, however, there have been clear signs of a broad economic recovery. recent figures show a sound gdp growth of 0. 6 % for the second quarter of 2017. unemployment stood at 9. 1 % in july, well down from its peak of 12. 1 % in 2013. moreover, both the imf and the ecb staff have recently upped their growth expectations for the 1 / 6 bis central bankers'speeches euro area. 1 at the same time, the healthy upswing of the german economy is continuing : 2017 will be the fourth consecutive year of gdpgrowth outpacing potential output. growth has gained further momentum and the upswing has become more broadly based. thus far, the major drivers have been consumption and housing investment. recently, industrial activity, exports and business investment have also made significant contributions to growth. looking ahead, the very high level of confidence among firms and households suggests that the upswing will continue not only into the second quarter of 2017, but also beyond. a very positive effect of the economic upswing has been the substantial reduction in unemployment. 3. … but not yet good with regard to the euro area as a whole, however, a recent study has shown that the labour market is in worse shape than the official job figures suggest, with workers unlikely to see real increases in pay because of the level of underemployment. 2 a measure of “ slack ” in the labour market indicates that about 15 % to 18 % of the euro area workforce are without jobs or would like to work more – which is nearly double the official unemployment rate. underemployment is even growing further in weaker labour markets, such as those in france and italy. the still weak labour market in many regions of the euro area is one of the most severe ongoing repercussions of the recent financial crisis and an indication that the recovery is not yet strong enough. this is particularly true with respect to the high level of underemployment among young people and in peripheral regions. thus, while the euro area economy looks increasingly healthy on average, it becomes clear on closer inspection that a lot still remains to be done to move onto a sustainable, integrative path of prosperity. this is also one of the reasons why populist extremists are still making electoral gains. 4. the political landscape : more populism in sight? when we look at the german general election five weeks ago, however,

quality primary, secondary and tertiary education. what is crucial to educational success in 5 to 50 years is that we increase public spending on qualified personnel. moreover, active labour market policies shall support the jobless in their efforts to qualify for other professions. 6. conclusion ladies and gentlemen the euro area ’ s economy has made it through the rain and is now under relative sunny skies. yet clouds still hover over the less - than - complete recovery – a lot remains to be done. the germany economy, on the other hand, has been in the sun for quite some time now, and even the short term outlook is quite promising. yet, serious medium - term risks loom. a vital euro area requires more reform : the monetary union must be reformed – but it is not a matter of simply more – or less – european integration. instead we need problem - oriented reforms of its institutional design. moreover, member states must embrace reform. for example, germany has to face the demographic challenges, and its economic policy has to strike the right balance between fostering the competitive dynamics of market economies and ensuring the social cohesion that is necessary for democracies. 5 / 6 bis central bankers'speeches i am confident that this is possible – but policymakers have to take their responsibility to reform very serious. thank you for your attention. 1 gdp projection by imf : 2017 : 2. 1 % ( + 0. 2 pp ) ; 2018 : 1. 9 % ( + 0. 2 pp ) ; gdp projection by ecb staff ; 2017 : 2. 2 % ( + 0. 3 pp ) ; 2018 : 1. 8 % ( + 0. 0 pp ) ; 2019 : 1. 7 % ( + 0. 0 pp ). 2 european central bank ( 2017 ), assessing labour market slack. ecb economic bulletin 2017 ( 3 ) : 31 – 35. 3 deutsche bundesbank ( 2017 ), design and implementation of the european fiscal rules, monthly report, june 6 / 6 bis central bankers'speeches