jean - claude trichet : the need for structural reforms in europe speech by mr jean - claude trichet, president of the european central bank, on the occasion of the jean monnet lecture of the lisbon council ’ s board of economists, brussels, 4 june 2007. * * * i would first like to thank the organisers for inviting me in the occasion of this jean monnet lecture of the lisbon council ’ s board of economists. it is both a privilege and a pleasure for me to be here today, to share with such a distinguished audience my views on the need to further structural reforms in europe. opening a lecture series named jean monnet, is even more than that for me. jean monnet was at the very heart of the foundation of european union. the reading of his memoirs is profoundly inspiring. today perhaps he would say again – i am only changing the tense of his verbs – : “ ceux qui ne voulaient rien entreprendre parce qu ’ ils n ’ etaient pas assures que les choses iraient comme ils l ’ avaient arrete par avance se condamnaient a l ’ immobilite. personne ne pouvait dire la forme qu ’ aurait l ’ europe ou nous allions vivre demain car le changement qui nait du changement est imprevisible » ; « those who did not want to start anything because they were not ensured that things would go exactly as they had planned were condemning themselves to remain immobile. nobody could say what europe would be tomorrow because future changes that are triggered by today ’ s changes are unpredictable ”. the setting up of the single currency has been a remarkable success, acknowledged in europe as well as across the entire world. however, to fully exploit the benefits of the euro, europe needs to face important challenges that require major policy measures. in 2006, real gdp in the euro area grew by 2. 8 %, which is the highest rate since 2000. along with the recent economic recovery, hourly labour productivity growth has accelerated and employment growth remained positive. these positive developments are very encouraging, but this is no time for complacency. europe still has some way to go, if it wants to cope with globalization and meet the challenges of rapid technological changes and ageing population. this is true at the level of europe as a whole as well as at the level of each particular economy. economic research

europe ’ s long term growth performance has also been constrained by the low rate of increase of its population and the ageing of its society. since the mid 1990 ’ s, population in the euro area has been growing at a rate of just 0. 4 % compared to 1. 1 % in the us. this aggregate result should however not see oliner and sichel ( 2002 ), “ information technology and productivity : where are we now and where are we going? ”, federal reserve board. see also jorgenson, d., m. s. ho and k. stiroh ( 2002 ), “ information technology, education, and the sources of economic growth across u. s. industries ”, mimeo. see pilat, d., f. lee and b. van ark ( 2002 ), “ production and use of ict : a sectoral perspective on productivity growth in the oecd area ”, oecd economic studies no 35. see gomezsalvador, musso, stocker and turunen ( 2006 ), “ labour productivity developments in the euro area ”, ecb occasional paper series no 53. european commission. it is important to mention a number of caveats related to the measurement of labour productivity in the service sectors. indeed, data on hourly labour productivity and ict, especially in the service sectors, are surrounded by considerable uncertainty and caution is therefore required when interpreting the results. in addition there are alternative explanations that may explain the labour productivity growth acceleration in the us in some services sectors such as higher entry rate, organisational changes and restructuring in the us, increasing efficiency and therefore accelerating tfp growth. see c. denis, k. mc morrow, w. roger and r. veugelers “ the lisbon strategy and the eu ’ s structural productivity problem ” european commission 2005. oecd. euklems database. cover the important role immigration has had in supporting economic growth in some euro area countries. however, what is worrisome is that at the same time, the gap in population growth has been even larger with regard to growth in the working age population [ the working age population grew on average by 0. 3 % in the euro area over the period 1996 - 2006 compared to 1. 4 % in the us ], which manifests that europe has a more acute problem of population ageing. i will deal with some of the policy implications of ageing later on in my presentation. the need for further structural reforms in