shows our assessment of the range of possible final outturns for four - quarter gdp growth rates for the past six years. the current vintage of official gdp growth data is shown by the green line. the centre of the darkest purple band of the fan reflects our view of the most likely path once the revisions process is complete – a “ backcast ”, if you like. the fan around this path indicates the uncertainty around this projection, with a 9 in 10 chance of the eventual outturn lying somewhere inside it. the width of this fan is based on the historical experience of data revisions. the fan becomes progressively narrower the further back in time one goes, reflecting the reduced incidence of revisions for more distant periods. for the recent past, the most likely path for the mature estimates of growth lies above the current vintage of data, reflecting our judgement that the business surveys and the past history of revisions together make it somewhat more likely that the official estimates for this period will in future be revised up, rather than down. i hope that this gives you a sense of the use we make of business surveys, and business intelligence more generally, in making our regular assessment of the state of the economy each month, before taking our decision on the appropriate level of bank rate. the timeliness of this information is particularly important at the current juncture, when the economic climate is changing rapidly. the global and uk economies have been subject to two large shocks of uncertain magnitude, duration and impact. the first is the continuing de - leveraging in the banking system and the attendant squeeze on the terms and availability of credit. the second is the fairly relentless rise in commodity prices, especially that of oil, driven in part by the robust growth in demand in the emerging economies. these two shocks both depress output growth, though they have divergent effects on inflation. in our may inflation report, our central expectation was for four - quarter gdp growth to slow markedly through this year, reflecting both subdued real income growth and tighter credit supply ( see chart 7, which also includes the same backcast information as chart 6 ). it was then expected to gradually recover through 2009 as credit conditions slowly improved. the corresponding projection for cpi inflation is shown in chart 8 ( note that no uncertainty is shown for the past, as the data for cpi inflation are rarely revised ). our central projection was for inflation to continue to rise during the second half of this year to a peak close to 4 % and then – assuming that oil prices stabilised –

, private consumption or excessive housing investment. to put it bluntly, some euroarea countries were living beyond their means prior to the crisis. to make matters worse, the bursting of the property price bubble in countries such as ireland and spain shook the banking system, which had helped to finance the construction boom on a large scale. negative feedback effects of government support measures included a drastic deterioration in public finances, which intensified the banking crises in these countries even further. this was because banks held sizeable amounts of bonds from their own countries. this sovereign - bank nexus is a particularity of the euro crisis, in which troubled banks and ailing states mutually dragged each other down further and further. above all, this episode shows how quickly the risk assessment of the market participants can change. this is partly because the fundamentals had worsened, but also because the overblown expectations were corrected and have now been reversed. one of the main issues debated by regulators after the crises was therefore how buffers can be created to make the banking system more resistant, not only to such turnarounds in sentiment but also to adverse developments in general, by ensuring a more solid liquidity position or a more robust financing structure. moreover, the severing of the unhealthy ties between sovereigns and banks is still seen by many - and rightly so - as an urgent necessity. at first, however, controversial emergency measures were taken to prevent the crisis from spreading throughout the euro area : in april 2010, greece, which had become heavily indebted, was practically unable to obtain any further loans on the capital markets and had to ask the other 4 / 13 bis central bankers'speeches countries in the euro area for financial assistance. together with the imf, the donor countries provided fiscal support to the ailing country and, as you all know, this was not the only “ financial assistance package ” that greece was to receive. following this ad hoc measure, the euro - area member states drew up a rescue package to be made available to all countries, which was initially temporary but later became a permanent fixture. a total of five countries ( ireland, portugal, greece, spain and cyprus ) received financial assistance from this fund. in doing so, the euro - area member states, for all practical purposes, established a kind of joint liability. this, in itself, increased the incentive for these countries to run up debt. to prevent this from happening, the esm rescue package may only be activated as a