. i also note that some of the pessimism about productivity is happening alongside great optimism in some quarters about a new industrial revolution built on better algorithms. the truth may well lie somewhere in the middle. it might also take a while to assert itself. those of us who remember the 1990s would recall that there have been previous episodes where considerable innovation seemed to be happening, but this took a while to be evident in the productivity data. this is because firms take a long time to adapt their business models and processes to the new technologies. and the greatest spur to change is capacity constraints. tight economies spur process innovation. when there is plenty of spare capacity, not even strong competition necessarily induces higher rates of adoption of new technologies. risks to the outlook taking all that into consideration, there seems a reasonable prospect that – as long as nothing really bad happens – this global expansion could continue for a while. this is especially so if the technology optimists are right about the implications of recent innovations. but of course there are risk scenarios that have the potential to derail the current economic momentum. foremost of these at present would be geopolitical risks. these are particularly difficult risks to integrate into a macroeconomic analytical framework. we aren ’ t political analysts. and i question whether anyone can truly know what the odds of certain events occurring might be. but we can at least think about what those risks might be and whether they might be increasing or receding. i think it is fair to say that geopolitical risks in europe and specifically the euro area have receded. while it remains to be seen how brexit will play out from a practical perspective, an existential crisis for the euro area and the eu more broadly no longer seems so close. against that, geopolitical risks in asia have increased. these are the low probability, high - impact events that can only ever be a risk to one ’ s forecasts. until something actually happens, they do not and should not affect the central scenario. even if you knew for sure that an event happened, the economic effects are often difficult to predict. financial risks will also be ever - present as risks to a macroeconomic outlook, and they are almost as hard as geopolitical risks to quantify. one that seems to be becoming less pertinent at 8 / 10 bis central bankers'speeches the moment is the international risk posed by ongoing low interest rates and the resulting search for yield by investors. now that policy interest rates globally

has continuous contact report little spare capacity in most industries and regions, and labour shortages in almost all occupational categories. there are shortages of drivers, pre - school teachers, supervisors, engineers, carpenters, architects, auditors, accountants, it personnel and health workers. in some regions, enterprises report that the number of vacancies is now higher than the number of job - seekers. there are also reports of shortages of other factor inputs. it has probably not been since the 1970s that we find such widespread reports of purely physical production constraints, for example now in the form of shortages of rigs and other equipment in the petroleum industry or shortages of plank, concrete, insulation and scaffolding in the construction industry. there are also long delivery times for capital equipment such as industrial machinery and road haulage vehicles. the analysis is based on national accounts figures. there is considerable uncertainty associated with the variable real capital in this statistics. when so many enterprises are faced with capacity constraints, we can probably expect higher inflation. a rising number of enterprises in our regional network expect a faster rise in selling prices ahead. it is still uncertain whether inflation will increase rapidly or whether it will only gradually near the target of 2½ per cent. unemployment has fallen sharply in the past few quarters. the rate of decline and level of unemployment are reminiscent of two previous cyclical peaks, the one in the mid - 1980s and the other that started in the late - 1990s and continued into this decade. both expansions culminated in a sharp rise in wage and cost inflation. while a high level of net inward migration has increased the supply of labour, there have also been large flows out of the labour market into various benefit schemes. sickness absence is at a high level and a rising share of the working - age population is on disability benefit or rehabilitation schemes. many choose to retire under contractual early retirement schemes at the age of 62, and these numbers will probably increase in the coming years. in norway, close to 600 000 persons among the working - age population are on benefit and retirement schemes. this accounts for 25 per cent of the labour force. it may seem that household saving has fallen markedly in norway in recent periods. saving was negative in the latter half of 2006, and probably during the first quarter of 2007, for the first time since the mid - 1980s. housing investment in the household sector as a whole is thereby fully debt - financed. a favourable economic climate and government surpluses may have created a sense of security that is influencing