raise productivity, both the implementation of product and labour market reforms and actions to improve the business environment for firms need to gain momentum in several countries. a swift and effective implementation of these reforms, in an environment of accommodative monetary policy, will not only lead to higher sustainable economic growth in the euro area but bis central bankers ’ speeches will also raise expectations of permanently higher incomes. therefore, it will encourage both households to expand consumption and firms to increase investment today, thus reinforcing the current cyclical economic recovery. as concerns fiscal developments, reflecting mainly the cyclical recovery and the low level of interest rates, the aggregate euro area general government deficit ratio is projected to decline gradually from 2. 1 % of gdp this year to 1. 5 % in 2017. the general government debt ratio is projected to decline gradually from 91. 5 % of gdp this year to 88. 4 % in 2017. fiscal policies should support the economic recovery while remaining in compliance with the stability and growth pact. full and consistent implementation of the pact is key for confidence in our fiscal framework. we are now at your disposal for questions. bis central bankers ’ speeches

as software and product designs, raise labor productivity. second, improvements in labor quality, or the capabilities of the workforce, contribute as well — through education, training, and experience. finally, innovations yield more or better output from the same inputs — the same capital and labor — such as the introduction of the assembly line and computer - aided product design. i will consider the role that policy may play through each of these channels. it is noteworthy that most of the recent drop in productivity is due to a lower contribution from innovation, although weaker investment has played a role as well. the contribution to labor productivity from labor quality has changed very little. 2 / 8 bis central bankers'speeches innovation our prospects for further significant technological innovations are hotly debated. some observers believe that we have exhausted the low - hanging fruit on the productivity tree and, in particular, that efficiency gains from the use of it have run their course. 3 other observers argue that we can reach fruit higher on the tree with each passing year. these observers believe that innovation yields better tools, such as 3 - d printers and genetic sequencing equipment, which themselves enable further technological advances. 4 for what it is worth, i believe the early signs of self - driving cars, the emergence of disease treatments based on genetics, and the falling costs for conventional and alternative energy production suggest that we are continuing to innovate, both in it as well as in other parts of the economy. one possibility is that we are in a productivity lull while firms reorganize to exploit the latest innovations ; it took decades before the full benefits of the steam engine, electrification, and computers were seen. 5 one way to ensure the vigor of innovation is to support research and development ( r & d ), and here the recent record is mixed. as shown in figure 3, r & d spending in the united states softened during the great recession. r & d funded by u. s. businesses has since recovered. however, government - funded r & d as a share of gross domestic product is at the lowest level in recent history. a great deal of the “ r ” in overall r & d is government funded and not tied to a specific commercial goal. the applied research built on this basic research ultimately yields productivity gains far into the future. 6 consequently, the decline in government - funded r & d is disturbing. 3 / 8 bis central bankers'speeches to raise productivity and economic well - being, firms must adopt innovations that emerge from r &