mentioned structural policies among the items selected to achieve enhanced co - ordination. the lisbon european council, held in march 2000, further enhanced the medium - term strategy to introduce structural reforms in the union. this strategy aims to make the european union the world ’ s most dynamic knowledge economy by 2010. it has since been amended so as to include social issues ( at the council of nice in late 2000 ) and environmental issues ( at the council of gothenburg in mid 2001 ). what has been achieved to date in the field of structural reforms is quite encouraging. noticeable successes have already been registered with regard to policies, such as new rules in telecommunications, electricity and gas markets. the current 2002 broad economic policy guidelines evaluation exercise is an opportunity to check on the progress accomplished in reforms that were agreed in lisbon and recently reasserted in barcelona. before reviewing the priority areas where fresh impetus is required, i wish to briefly make two remarks : first, the responsibility for structural reforms in the european union rests with the individual member states. consequently, there is a wide variety of institutional solutions and regulatory arrangements across countries and sectors. i nevertheless consider that such a decentralised approach should be considered as an opportunity, rather than a disadvantage. it encourages “ cross fertilisation ” of best practices through increased co - ordination of member states ’ structural policies. my second remark relates to the changeover to the euro. this event has been a major structural reform in itself, i. e. a powerful drive towards restructuring the european economy. an important objective consists in raising the potential output growth of the european economy if france and europe seek to secure sustainable growth at levels that are as high as possible, the key variable is potential output growth. there are three ways of raising the level of potential output growth : first, to boost investment : the more we invest and the lower inflationary pressures, the stronger potential output growth. for example, a two - point increase in the productive investment ratio ( productive investment / gdp, 11, 4 % during the last five years in france ) over the next decade would bring about an average acceleration of more than 0, 5 point in potential output growth over the same period. the second way of raising potential output growth is to increase the quantity of actual labour : the european council of lisbon set as a central objective the rise of the employment rate of our populations from 60 to 70 % in 10 years. the council also fixed two sub objectives : to raise the employment rate of women to 60 % and employment

depreciating the cost over time, it provides an incentive to firms to invest in new capital goods. however, estimates of the quantitative effect of this tax incentive on investment are highly uncertain. and anecdotal evidence that firms are responding to the partial - expensing provision is not clear - cut. as a result, the impact of its removal is equally unclear. specifically, if partial expensing is having a very limited effect on firms ’ investment decisions, recent increases in business spending on equipment would be consistent with a stronger underlying pace of investment and faster gdp growth next year. finally, the sustainability of expansion will depend importantly on the pace of improvement in the labor market. to be sure, october ’ s payroll employment report was a positive sign. but as we saw earlier this year, one month of data does not make a trend. robust job gains in the coming quarters would be a convincing sign that businesses have become more confident about the future course of the expansion and would provide households with the wherewithal to maintain a healthy pace of spending growth. let me turn finally to a brief discussion of monetary policy. as i noted earlier, monetary policy has played an important role in providing support for the economy in recent years. but our work is not done. now that the expansion seems to have taken hold, we face the challenge of making the transition to a policy stance more appropriate for sustained economic expansion. our goal is to do so in a way that maximizes economic growth while sustaining the progress that we have made in achieving price stability. keeping inflation low and stable will contribute importantly to sustaining financial conditions conducive for further gains in economic activity. along these lines, the fomc has raised the target federal funds rate by 25 basis points at each of our last four meetings. as indicated in its most recent statement, the fomc continues to support the assessment that removal of accommodation will likely proceed at a measured pace. however, the committee will respond to changes in economic prospects as needed to maintain price stability, and it is those developments that will ultimately determine the level and term structure of interest rates.