Following the shutdown, a second phase now ensues in which the economy is gradually beginning to recover, in step with the lockdown-easing measures. Some key characteristics mark this second phase. First, uncertainty remains very high. There are still many unknowns as to how the disease will unfold. This uncertainty will adversely affect consumption and investment decisions and international trade. Second, minimising the risk of a second wave of the disease will mean retaining certain restrictions and health safety measures for some time. These circumstances will have a bearing on normal economic activity and will unevenly affect the different productive sectors. Third, we will also be able to see in this phase to what extent, despite the economic policy measures applied, the crisis is causing more lasting damage to different sectors, firms and population groups. Finally, signs are emerging that the pandemic may cause some structural changes, although these are difficult to define at present. In this second phase, the economic policy response must combine two objectives: to support the recovery (which advises not withdrawing the support measures prematurely, as that would increase the risk of economic growth enduring more lasting harm); and to help the economy adjust to the post-pandemic scenario. 1  This extraordinarily complex setting also necessitates the definition of a reform agenda aimed at tackling our economy’s structural challenges, which have become more pressing with the crisis. Lastly, nor should we forget that, after the pandemic, we will have our highest level of public debt in many decades.

Fiscal policy will have to play a predominant role in the strategy needed to attain the objectives set in this area, both to deter environmentally harmful activities, through an internationally harmonised tax system, and to foment the public and private investment needed to develop cleaner technologies, and to alleviate the social costs of the transition. The financial sector is also called on to play a key role. To do so, it is crucial that it incorporates into its decision-making the risks associated with climate change. Environmental stress tests devised by supervisors will be a useful instrument in this connection, as will the international harmonisation of a taxonomy that provides transparency on the activities that contribute to the transition to a low-carbon economy. 4.6. Maintaining a sound financial sector I devoted my last appearance before the Parliamentary Economic Committee to analysing the challenges this crisis will pose to the financial sector. I should in any event like to stress today that, from the medium-term standpoint, the current crisis will entail additional downward pressure on profitability. That highlights the need for banks to urgently address some of the challenges associated with digitalisation and the management of cybersecurity risks, along with others of a reputational nature. An additional drive must be made to reduce operating costs and to achieve efficiency gains, to invest in technology and to improve banks’ conduct and reputation. 4.7. Addressing the new structural challenges after COVID-19. All the challenges I have mentioned were prior to the pandemic breaking.