success of the vaccination campaigns in europe, which have allowed a significant reopening of the economy. with the lifting of restrictions, the services sector is benefiting from people returning to shops and restaurants and from the rebound in travel and tourism. manufacturing is performing strongly, even though production continues to be held back by shortages of materials and equipment. the spread of the delta variant has so far not required lockdown measures to be reimposed. but it could slow the recovery in global trade and the full reopening of the economy. consumer spending is increasing, although consumers remain somewhat cautious in the light of the pandemic developments. the labour market is also improving rapidly, which holds out the prospect of higher incomes and greater spending. unemployment is declining and the number of people in job retention schemes has fallen by about 28 million from the peak last year. the 1 / 3 bis central bankers'speeches recovery in domestic and global demand is further boosting optimism among firms, which is supporting business investment. at the same time, there remains some way to go before the damage to the economy caused by the pandemic is overcome. there are still more than two million fewer people employed than before the pandemic, especially among the younger and lower skilled. the number of workers in job retention schemes also remains substantial. to support the recovery, ambitious, targeted and coordinated fiscal policy should continue to complement monetary policy. in particular, the next generation eu programme will help ensure a stronger and uniform recovery across euro area countries. it will also accelerate the green and digital transitions, support structural reforms and lift long - term growth. we expect the economy to rebound firmly over the medium term. our new staff projections foresee annual real gdp growth at 5. 0 per cent in 2021, 4. 6 per cent in 2022 and 2. 1 per cent in 2023. compared with our june staff projections, the outlook has improved for 2021 and is broadly unchanged for 2022 and 2023. inflation inflation increased to 3. 0 per cent in august. we expect inflation to rise further this autumn but to decline next year. this temporary upswing in inflation mainly reflects the strong increase in oil prices since around the middle of last year, the reversal of the temporary vat reduction in germany, delayed summer sales in 2020 and cost pressures that stem from temporary shortages of materials and equipment. in the course of 2022 these factors should ease or will fall out of the year - on - year inflation calculation. underlying

with a standard fluctuation band of ±15 % around their central rates against the euro, while estonia and lithuania kept their currency boards as a unilateral commitment. in order to ensure a smooth participation in erm ii, countries have firmly committed to take the necessary measures to preserve macroeconomic and exchange rate stability. participation in erm ii has been smooth. the four currencies in the erm ii have traded continuously at or close to their central rates, while short - term interest rate differentials vis - a - vis the euro area have been small. beyond erm ii membership lies the adoption of the euro, the crowning achievement of the monetary integration process. in order to adopt the euro, non - participating eu member states have to achieve a high degree of sustainable economic and legal convergence. every country will be assessed on its own merits and its own particular situation, on the basis of a strict analysis of the performance relating to the maastricht convergence criteria. let me stress that there is no pre - set timetable for the enlargement of the euro area. economic challenges for the new member states how far are the new member states on this road towards the euro? the countries that joined the eu this year have shown impressive economic growth rates and have made great strides in reducing inflation. they belong to the most dynamic economies in the eu, having gone through profound structural changes. for example, they have taken thorough measures to reform their product and labour markets, and some new member states, in some respects, may be even more advanced than other, existing eu countries. they have become more integrated with the euro area, with the major part of their trade now occurring with the euro area and tight financial links : as a matter of fact, the share of the new 10 member states in the total external trade of the euro area stands around 11 %, compared with around 14 % for the us and 3 % for japan. in addition, the transition process has brought their economic structures closer to those of the euro area. at the same time, while remaining a diverse group in many respects, the new member states still display distinct economic characteristics that differ from the euro area. their income - per - capita and productivity levels are still low relative to the euro area, which may have an impact on their inflation rates. let me mention two particularly important economic challenges that the new member states are confronted with on the road to the euro : price stability and fiscal policy. price stability is an essential