staff compared to earlier projections mainly reflects the carry - over effect of weaker economic developments in 2004 rather than a downward revision of the expected pick - up of activity this year. there are some signs of an upturn in investment. as far as consumption is concerned, we expect that it will increase in line with real disposable income, which is projected to rise by about 1. 4 % in 2005. despite the increase in oil prices? oil prices are assumed to decrease gradually in the future as implied by futures markets. we are making no assumptions about other factors, such as an improvement in confidence, that could positively influence consumer behaviour. of course, if oil prices turn out to be higher than currently envisaged, they would dampen disposable income and consumption growth. what constitutes a natural interest rate for the ecb? the concept of a natural interest rate refers to an equilibrium real interest rate that reflects productivity and population growth. although most recent analyses seem to indicate that in the euro area it lies within a corridor of 2 % to 3 %, i would not be surprised if the lower bound of the estimated range is revised downwards as a result of the lower growth in productivity in the euro area during the past ten years. owing to the high level of uncertainty surrounding the estimates of the natural interest rate, great caution is called for when using them. the natural interest rate does not constitute an intermediate objective of the ecb ’ s monetary policy. competitiveness is improving in germany, including as a result of wage cuts. is this a “ recipe ” for other countries, like italy? germany has indeed succeeded in significantly improving its international competitiveness. without giving advice to individual countries, i must stress that it is essential to improve competitiveness to effectively compete in the global economy. italy ’ s competitiveness has declined during the past five years. it is therefore important to reverse this developing trend. how? for example, by increasing productivity growth and enhancing market flexibility. the wall street journal views italy as a “ fortress ” because of its restrictive attitude towards imports. do you support this policy, or is it better to be more competitive? past experience has shown that protectionism is not effective and can never be an appropriate response in the long term. it may even be damaging in the short term, if it leads other countries to introduce protectionist measures as well. besides, such measures are not in accordance with the european union ’ s fundamental principle of an open and competitive economy. competition is

christine lagarde : remarks on the occasion of receiving the grand prix de l ’ economie 2019 from les echos speech by ms christine lagarde, president of the european central bank, at the " grand prix de l ’ economie des echos pour l ’ annee 2019 ", paris, 5 february 2020. * * * it ’ s a great honour to be awarded this prize, and to receive it in the presence of so many leading figures from the french business community. the environment facing european business today is characterised by both uncertainty in the short term and a changing landscape in the longer term. the short - term uncertainties are mainly related to global risks – trade, geopolitical and now the outbreak of the coronavirus and its potential effect on global growth. over the last two years, the euro area economy has been quite resilient to global shocks, with our accommodative monetary policy supporting employment and consumption. and, though gdp growth in the last quarter was weak, it was broadly in line with our expectations. but while the threat of a trade war between the united states and china appears to have receded, the coronavirus adds a new layer of uncertainty. so we ’ re continuing to monitor closely how these risks develop and how they feed into our central scenario for the economy. in the face of these uncertainties, the ecb ’ s forward guidance on interest rates and asset purchases acts as an effective automatic stabiliser. the longer - term picture is different. ambitious proposals are gathering momentum within europe today and look set to profoundly reshape the environment for business. in particular, two big ambitions are pervading many aspects of policymaking in ways that create change, but also opportunity : the goal to build real “ european autonomy ” ; and the aim to urgently fight the consequences of climate change. i know that, as business leaders, you naturally seek the new opportunities that emerge for your companies in such times. so i ’ d like today to talk about how i see these ambitions evolving, and where they intersect with the tasks and priorities of the ecb. european autonomy we all have a sense of the world around us moving more quickly. the post - war global order is fracturing, tensions between great powers are rising and technological change is transforming the way we produce, distribute and consume. this environment clearly exposes europe to new types of risk, as demonstrated today, for example, by the turn towards protectionist policies and