As discussed in Chapter 1 of this Survey, the euro area has shown less resilience to the negative and largely OECD-wide shocks than a group of mostly English-speaking countries (Australia, Canada, New Zealand and the United Kingdom) that were hit by the same shocks. In these countries economic activity has remained closer to trend than in the euro area, with the average absolute output gap remaining small. Inflation in these countries remained close to target, allowing a strong reaction of monetary policy to the international downturn. In the euro area, inflation has remained slightly above target despite weak activity, limiting the European Central Bank’s (ECB) room to cut interest rates more ...