The slow pace of recovery of the world economy continues to cause concern. Growth in 1992 will, for the third year in succession, be less than the trend rate of growth of productive potential. For the G7, output in 1992 is likely to be only 1¾% higher than in 1991. The faltering recovery in the United States led the Federal Reserve to cut its discount rate by 50 basis points at the beginning of July and in Japan the Official Discount Rate was lowered again at the end of July. In Germany, continuing rapid monetary growth led the Bundesbank to raise its discount rate by 75 basis points in mid-July. The Danish rejection of the Maastricht Treaty on 2 June introduced further uncertainties into the European economic outlook. The gap between short-term interest rates in Europe, on the one hand, and the United States and Japan, on the other, continues to widen. Differences in long rates are, however, much smaller. In the United Kingdom, survey data and indicators of economic activity have offered mixed signals on the prospect for recovery, but there has been further progress in reducing inflation.