, for 2008 interest income may still benefit from the positive impact of business inertia. amid a sharp drop in gross value added in the financial services sector, real gdp growth in 2007q3 turned out at 0. 7 %, below trend estimates. the decline of net results for 2007 by 11. 5 % does also not warrant optimism for the contribution of the financial sector to gdp in the last quarter of the year. this figure is, however, not yet published for luxembourg. the renewed fall in equity markets at the beginning of the year coupled with a 5 % drop in january of net assets of the fund industry, is also likely to be a further drag on economic activity in luxembourg. among the series of stress testing tools and macro - prudential indicators designed by the bcl, the bcl built its own index to evaluate the degree of the banking sector ’ s vulnerability. the recent estimates ( see chart 9 ) show an increase of the degree of banks ’ vulnerability from the end of 2006 to the third quarter of 2007. however, the index forecast for 2008 and 2009, based on the december eurosystem macro - economic projections, seems to indicate that the degree of vulnerability would tend towards its average level. still, it remains to be seen how profitability in 2008 will be affected adversely by further valuation losses, increased funding costs, slowing credit growths, declining non - interest income. the bcl ’ s retail interest rate statistics reveal that the banks ’ response to the money market disruptions and the increase in wholesale funding costs falls short of what several observers had feared. according to the data up to december 2007, the bank lending rates applied on new loans ( at variable rates ) to households for house purchase have in the course of 2007 actually eased by 20 basis points relative to the 50 basis points increase in the ecb minimum rate. as regards non - financial corporations, the reference rate of loans at variable rates is very often the 3 - month euribor. on this segment, we have noted a strong impact as the lending rates rose by more than 70 basis points in 2007, hence 20 basis points more than the adjustment in the key central bank rates. but that is still substantially lower than the rise in the money market rates which, at their peak, reached more than 100 basis points since january 2007. interest rates however are only one criterion of credit conditions. banks can also adapt to more stringent credit standards by raising the collateral requirements for example. our bank lending survey

and variable lags. second, the mandate underlines that price stability is assessed euro area wide, the governing council not reacting to national or regional developments. the ongoing accession process will have no impact on this underlying philosophy. our will to be as transparent as possible so as to allow agents to internalise stable price developments in their expectations is key to accountability and will remain so with accession. in order to underline that we pay great attention to developments in the real economy, i am very glad that i am able also now to invite a representative of the real economy to this rostrum, namely the chief financial officer of the largest steel company in the world. i am very glad to count him among the supervisory board of the luxembourg central bank. i think very appropriately that he will also dwell on something which is similar to my mind, namely that you also have to see globalisation from luxembourg and not go the other way around and start with globalisation and then try to come back to your national attitude. we only can realise our aims in the context of the international environment and therefore i am very glad and interested to hear now what mr. michel wurth will have to tell us. thank you very much for your attention.