The European Union needs an economic and social model aiming at facilitating adjustments into new employment rather than the excessive protection of unproductive jobs. Investments are needed to build more efficient infrastructures. We need better support for research and development activities, and also improvements in our policies regarding human resources and education. All these measures are key for productivity in the European Union to pick up and are of utmost importance to make the single market work better to the benefit of all Europeans. Structural reforms that are designed to increase the flexibility of markets permit a higher level of sustainable long-run growth and employment. They furthermore enhance the capacity of the participating countries to cushion macroeconomic shocks. The more rigid labour, product and financial markets are, the higher will be employment and income losses experienced in response to changing domestic and external economic conditions. This is due, in particular, to the fact that with nominal rigidities prices and wages cannot adjust suitably and in a timely manner. Conversely, the speedier adjustments of wages and prices can take place in response to changes in macroeconomic conditions, the lower will be the burden of adjustment put on volumes and thus the lower the costs in terms of employment and output losses. We recognise that the implementation of structural reforms requires courage and leadership. Especially, they may temporarily be perceived negatively by some economic agents.

9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  References Adams-Prassl, A., Boneva, T., Golin, M. and Rauh, C. (2020) ‘Work Tasks That Can Be Done From Home: Evidence on the Variation Within and Across Occupations and Industries’ Cambridge INET Working Paper 2023. Alon, T, M Doepke, J Olmstead-Rumsey and M Tertilt (2020), “The Impact of COVID-19 on Gender Equality”, Covid Economics, Issue 4, CEPR Press. Andrew et al (2020). ‘Learning during the lockdown: real-time data on children’s experiences during home learning’ Institute for Fiscal Studies briefing note. APSCo (2020) ‘Flexible working increases five-fold’. Available at https://www.thehrdirector.com/businessnews/flexible-agile-working/flexible-working-increase-five-fold4072019/ Barrero, JM, Bloom, N and Davis, S (2020a) ’60 million fewer commuting hours per day: How Americans use time saved by working from home.’ VoxEU Barrero, JM, Bloom, N and Davis, S (2020b) ‘COVID-19 Is Also a Reallocation Shock’ Becker Freidman Institute Working Paper No. 2020-59 Bartik, A., Cullen, Z., Glaesser, E., Luca, M., and Stanton, C. (2020) ‘How the COVID-19 crisis is reshaping remote working’ Vox-EU Bloom, N., Liang, J., Roberts, J., and Ying, Z. J. (2015). ‘Does Working from Home Work? Evidence from a Chinese Experiment’ The Quarterly Journal of Economics, 130(1), 165–218. Blundell, R., Joyce, R,. Costa Dias, M. and Xu, X. (2020). ‘Covid-19: the impacts of the pandemic on inequality’. Institute for Fiscal Studies briefing note. Boeri, T,. Caiumi, A., and Paccagnella, M. (2020) ‘Mitigating the work-security trade-off while rebooting the economy’ Covid Economics, Issue 2, CEPR Press. Cui, R,. Ding, H,.