##gating, with the outlook for inflation and economic activity being rendered particularly uncertain owing to both the legacy effects of previous shocks and renewed risks. in addition, the current hiking cycle is unique, with the sequence of rate hikes being unprecedented in speed. taking a longer - term view, structural changes in economic interactions may also exert upward pressure on inflation in a more fundamental way. at the global level, changes in trade patterns and energy markets, rising climate - related risks and the commitment to decarbonise the economy, as well as geopolitical risks, may have longer - lasting implications, which could pose greater challenges to price stability. for these reasons, any assessment based on comparisons with historical regularities and model - based estimates must be complemented by real - time monitoring of the transmission to financial and economic conditions. while there are signs of the strength of the first leg of the transmission, a substantial share of the transmission from financing conditions to the real economy is expected to still be in the pipeline, subject to longer lags. this reinforces the need for a data - dependent approach to determining the appropriate level and duration of a restrictive monetary policy stance. 1 darracq - paries, m., motto, r., montes - galdon, c., ristiniemi, a., saint guilhem, a. and zimic, s. ( 2023 ), " a model - based assessment of the macroeconomic impact of the ecb's monetary policy tightening since december 2021 ", economic bulletin, issue 3, ecb. 2 see, for example, aastveit, k. a., natvik, g. j. and sola, s. ( 2017 ), " economic uncertainty and the influence of monetary policy ", journal of international money and finance, vol. 76, pp. 50 - 67. 4 / 4 bis - central bankers'speeches

. 18, pp. 3 - 26 ; and also gordon, r. j. ( 2004 ) : “ two centuries of economic growth : europe chasing the american frontier ”, cepr discussion paper, no. 4415. eurostat data. oecd employment outlook 2005. figure is estimated for 2005. see, for example, genre, v., r. gomez - salvador and a. lamo ( 2005 ) : “ european women : why do ( n ’ t ) they work ”, ecb working paper series, no 454, march 2005. eurostat data. for a further extension of this topic see european commission ( 2004 ), “ the link between product market reforms and productivity : direct and indirect impacts ”, the eu economy : 2004 review. the course of the 1990s, hourly labour productivity grew on average by 8. 5 % in the euro area over the period 1996 - 2003 compared to 6. 9 % in the us. 16 policies that are needed to further improve the functioning of product markets include the extension and deepening of the eu internal market. with service - related activities representing around 70 % of value added and employment in the euro area ( against almost 80 % in the us ), much more competition in eu service markets is required. overall, a higher competition in services markets would promote a more dynamic economy, increase the growth potential of europe and of the euro area and create more jobs. on 16 february 2006, the european parliament approved a draft directive aimed at a free market for services in the european union. this is welcome as it goes in the right direction even if we would have preferred a bolder move. 17 i would stress particularly the necessity of a very rapid and expeditious implementation of the new directive on services. not only because as i have already said the reason why europe is lagging behind the us in terms of productivity increases is very much due to poor behaviour of the services sector in this respect, but also because improving productivity in “ nontradables ” would permit europe to contribute more efficiently to a cooperative solution of global imbalances. the third prerequisite for higher growth in the euro area is the unleashing of entrepreneurial potential by creating a business - and entrepreneurial - friendly economic environment. this includes lowering costs imposed by public sector administrations for existing firms and business start - ups. let me illustrate this with some figures. according to the world bank, in 2004, the average cost of starting a business with up