the euro area over the period 1996 - 2003 compared to 6. 9 % in the us. the euro area hicp index for telecommunications fell by 35 % relative to the overall euro area hicp index in the period 1998 - 2005. the third prerequisite for higher growth in the euro area is the unlocking of business potential by creating an entrepreneurial - friendly economic environment. this includes lowering costs imposed by public sector administrations for existing firms and business start - ups. let me illustrate this with some figures. according to the world bank, in 2004, the average cost of starting a business with up to 50 employees in the euro area ( excluding luxembourg ) is estimated to have been around ten times larger than in the us 12. the policy implication of lowering business regulation is that eu countries can help to raise economic growth by avoiding an excessively restrictive regulatory environment for firms. the immense importance of this issue is increasingly appreciated by european governments and several initiatives at national or eu level have started to implement actions for a “ better regulation ”. in march 2006, the european council called for the establishment of “ one stop ” arrangements in each member which would allow the setting up of company in one week by end 2007. today it takes on average 27 days to set - up a new business in the euro area compared to 5 days in the us. 13 fourth, to fully exploit productivity potential, the labour and product market reforms just mentioned need to be accompanied by policies that help to diffuse innovation and technological change. this includes, inter alia, measures to support innovation by higher investment in research and development ( r & d ). in 2004, roughly 1. 9 % of euro area gdp was spent on r & d compared to 2. 8 % in the us. europe has set itself the target of achieving a share of 3 % of gdp by 2010. analyses made by the european commission 14 show that if the effects of the increased knowledge investment foreseen within the lisbon strategy were added in, the increase in annual eu potential output growth could reach up to three quarters of a percentage point. of course, these are just crude calculations, which can certainly be challenged, but they give a notion of how large the welfare - enhancing potential of implementing structural reforms is. of crucial importance in this strategy are the efforts to improve the labour force ’ s level of education and expertise. the impact of education on growth may be related to innovation, as well as the adoption of new technologies. additionally, better education and training help

in balance. there are now global factors that could cast a shadow over the strong growth outlook. first, the new trade measures announced by the us administration. ecb estimates indicate that the first - round effects of the proposed measures for the euro area are likely to be slight, even in the event of retaliation by us trading partners. the after - effects however could be stronger. second, developments in the foreign exchange and other financial markets. in this respect, i would like to point out though that the most recent volatility on stock markets had little impact on other asset classes in the euro area. the strong economic growth is also having an impact on the labour market. the increase in employment since mid - 2013 – almost 7. 5 million jobs – has offset the total number of jobs lost overall during the crisis. the unemployment gap – a measure of labour market overcapacity – now seems to have closed, although it has again been revised downwards, and employment in 1 / 5 bis central bankers'speeches the euro area is higher than it has ever been. in short, our monetary policy has successfully boosted demand and returned slack resources back into productive use. in view of this, the path of inflation should, over the medium term, approach our inflation objective of below, but close to, 2 %. and inflation is acceletating, albeit more slowly than we would like, but more clearly than expected in october, when we decided to scale back the purchases. the increase in trust that inflation is on the right path will also influence our reaction in the future. two additional factors play an essential role here : the first has to do with the declining impact of our net purchases over time. the holdings are becoming steadily more important than the growth. the second factor relates to the link between output and inflation. in the past, a highly expansionary policy was needed to counter the economic downturn and to ensure that inflation remained consistent with our definition of price stability. headwinds reduced the effectiveness of our monetary policy and they had to be resisted. for example, deleveraging caused a greater inclination to save, the general uncertainty dampened investments and a long period of low inflation threatened to de - anchor inflation expectations. in addition, deflation was a real risk. these negative factors have eased during the ongoing recovery. deflation fears have been dispelled. and the assumption is that, under these circumstances, a policy of unchanged monetary policy is unduly expansionary. in addition,