for which detailed information is not yet available. business surveys continue to be favourable overall, but there are signs that the trade tensions could lead to a revision of investment plans. this is also why a deterioration of funding conditions in the economy stemming from higher interest rates on public debt must be avoided. in a country such as italy, where the pace of growth is already slow and has been below that of the euro area for many years now, a further slowdown in economic activity would be felt more deeply than elsewhere. fiscal policy has limited room for manoeuvre to compensate for a possible contraction in private demand. in this context, priority should be given to measures that incentivize investment in infrastructure, both material and immaterial, and labour market participation. resources should be concentrated on measures that are clearly directed at supporting economic activity effectively. the common monetary policy responds to the situation of the euro area as a whole. last week the ecb ’ s governing council, in view of ongoing economic growth and of the gradual increase in inflationary pressures, reiterated its intention to end the net asset purchases at the end of this year. however, taking into account the uncertainty surrounding the outlook for the world economy and for financial markets, as well as the need to support price dynamics in the medium term, the council has confirmed that it intends to continue to provide significant monetary stimulus. even after the end of the net purchases, this support will arise from the sizeable stock of assets in the eurosystem ’ s portfolio, the reinvestment of the principal as these securities mature and the indication that the key ecb interest rates will remain at their present levels for as long as necessary. monetary policy normalization is a very delicate process, as the experience of other countries has shown. as i have observed in the past, the italian economy can withstand an end to the low interest rate regime with no risk to economic activity or the public finances, provided that fiscal policy remains anchored to stability and that the reform process aimed at strengthening the economy continues. growth potential the growth gap between italy and the rest of the euro area is a structural problem that cannot be resolved through monetary stabilization policies or by an expansionary fiscal stance. its main cause is the low productivity of firms which have lagged behind in responding to the drastic technological changes that began a quarter of a century ago. in this period italian firms have generally not been sufficiently innovative and have grown very little. in addition, italy has an older population than other countries

prices ( hicp ), which is the measure of inflation in the euro area, france is one of the three best - performing countries in terms of inflation : french inflation stood at 0. 7 % as an annual average in 1998, compared with 1. 1 % for the euro area. in the course of 1998, the franc remained constantly above its central rates vis - a - vis the other most credible currencies of the european exchange rate mechanism. the goal of a stable external value for the franc — which was the external intermediate objective of french monetary policy over the last five years — was thus achieved. this went hand in hand with the maintenance of the competitiveness of the french economy. the current account surplus totalled frf 236 billion in 1998, or 2. 8 % of gdp, comparable to the level recorded in 1997. with regard to monetary and financial developments, and particularly growth in monetary aggregates — which constitutes the internal intermediate objective of french monetary policy —, the means of payment covered by m1 posted a year - on - year rise of 3. 1 % in december 1998, after 6. 5 % in december 1997. sight deposits paying regulated rates of interest included in m2 – m1 showed a yearon - year increase of 5. 7 % in december 1998, sharply down on the 9. 2 % recorded at the end of the previous year. similarly, m2 progressed by 4. 3 %, less than the 7. 8 % rise recorded in 1997. the aggregate m3 – m2, which covers liquid investments paying market rates of interest, stabilized in 1998 with a 0. 6 % decline after the 8. 2 % drop recorded in 1997. this was mainly due to growth in money market ucits, which rose by 4. 1 % after declining by 11. 3 % the previous year. the year - on - year increase in m3 was 2. 7 %, compared with 2. 0 % in december 1997. growth in investment in contractual savings products recorded in the p1 investment aggregate maintained a sustained pace in 1998, and in all m3 + p1 showed a year - on - year progression of 4. 0 %, against 5. 1 % in december 1997. total domestic debt posted a year - on - year rise of 3. 4 % at the end of december. it had shown an increase of 3. 7 % in december 1997. financing raised on the domestic markets progressed vigorously, with the year - on - year advance standing at 9. 2 %