Spencer Dale begins by noting that "the economy appears to have turned". In a technical sense, the recession does appear to be coming to an end. But he states that we are only just starting along the road to recovery. In order to meet the inflation target a sustained period of robust growth is required to bring the level of activity better into balance with the supply capacity of the economy. "It is a recovery in levels of output and employment that matters, not just a return to positive growth". He envisages that progress could be hindered by a number of headwinds, including tight credit conditions, the need for a rebalancing of international trade flows and the extent to which households need to rebuild their balance sheets. It is this third factor on which Spencer Dale focuses in this speech.