. 25 percent, monetary policy is still having a restrictive effect. that is to say, policy is still playing a part in sustainably lowering inflation. whether a further policy rate move will follow in december is something we will decide on the basis of the data available to us at that time. in addition, experts from the ecb and the euro area national central banks – so including the bundesbank – will be presenting new projections for inflation and growth in december. it is important to note that the governing council is not pre - committing to a particular rate path. we decide on the road ahead based on a meeting - by - meeting approach. 4 structural challenges where the german economy goes from here is, as i said, about more than just economic activity. the current weak growth also has structural causes. as promised, i'd like to take a look at those now. there are four factors i want to shine a light on in particular. first, energy prices in germany are likely to be higher than before russia's war against ukraine for some time to come. it's true that gas prices are currently far below the extreme levels seen in the summer of 2022, but they clearly exceed the average recorded in the pre - crisis year of 2019. second, efforts to transition to a net zero economy will entail considerable costs for an extended transitional period at least. third, demographic change is exacerbating the shortage of skilled workers. take, for example, the totality of all persons who could be available to the labour market – what's known as the potential labour force. bundesbank projections show that germany's potential labour force will start shrinking noticeably from 2026 onwards. it is unlikely that immigration will be able to compensate for this decline. fourth, as a highly interconnected part of the world economy, germany clearly stands to lose from increasing protectionism and geo - economic fragmentation. these four structural challenges are also putting the competitiveness of german firms to the test. and to make the german economy more competitive again, investment is required – in real and human capital – and good business conditions. businesses in germany are currently holding back from investing, however. the bundesbank has been conducting a survey among firms in germany for the past four years or so. a year ago, we asked survey participants about the reasons behind weak investment. besides the difficult macroeconomic setting, the responding firms chiefly cited high wage and energy costs and a shortage of skilled workers. among the

deleveraging needs and better labour market conditions. furthermore, the recovery in business investment is supported by improvements in corporate profitability and the very favourable financing conditions. at the same time, euro area exporters are benefiting from the ongoing global economic expansion. these figures give some comfort as to the eu ’ s economic future. and i personally am confident that this trend can and will continue. however, challenges are looming : two particularly serious ones are brexit and euro area reform. the current, upbeat trajectory has to be harnessed as we set about mastering these historical challenges. 4. brexit looming the first challenge, brexit, began in june 2016, when the majority of uk voters decided to leave the eu. where are we now? brexit is definitely happening, and it is more and more likely to be a hard brexit – by which i mean that there will be a complete exit rather than a partial one. the uk and the eu will go their separate ways. since december of last year, there is a better chance of reaching a sensible agreement before the deadline of march 2019. the eucouncil agreed in december on the brexit divorce issues : basic compromises were reached on three fundamental questions, namely the rights of eu citizens in the uk after brexit ( and vice versa ), the border between ireland and northern ireland, and the uk ’ s financial contributions to the eu budget over the coming years. this compromise allows us to move forward to negotiate the terms of our future partnership. but let ’ s keep in mind that substantial progress has yet to be made on the details of the three 2 / 5 bis central bankers'speeches separation issues i just mentioned. now, since negotiations have been going rather slowly, there may be a transition period of two years from 2019 to 2021 – during which the old rules would still apply and the terms of the new partnership could be implemented. what kind of economic partnership this will be has yet to be determined. if no solution is found, the eu and the uk will trade under rules set by the world trade organization – which is in nobody ’ s interest, but is likely to be particularly harmful to the uk economy, while the economic impact on europe will be limited by comparison. take germany for instance. the uk is an important export market, accounting for ca. 7 % of german exports. but this implies only 2 % of value added to the german economy. my hope is that all the