Moreover, although the lifting over May and June of the bulk of the measures restricting people’s movement and activity in numerous sectors led to a swift recovery in Spanish output in those months, there were mounting signs during the summer that the rebound was losing momentum. In this respect, a set of high-frequency indicators appear to show that, especially since mid-August, there has ceased to be any significant additional headway in this recovery. This apparent slowdown in the improvement in activity has coincided with an upsurge in COVID-19 infections, which have not ceased to increase since early July. Further, although the rebound in the virus has been common to many other countries, it has been more acute in Spain. As a result, compared with the main European economies, Spain is currently posting notably higher figures for new infections per 100,000 inhabitants. This worsening epidemiological situation has led to the progressive reinforcement of certain social distancing measures. While these restrictions are so far limited, they are affecting the process of economic recovery. It is highly likely that this adverse impact will have been particularly acute in the tourist sector, which moreover operates at peak over the summer period. Indeed, the rebound in the pandemic in Spain during the summer led the authorities in many tourist-issuing countries, which include the main European markets, to announce various measures discouraging travel to Spain. Accordingly, the levels of activity in the sector during the summer were at some distance from those for the same period a year earlier.

Second, if these programmes are extended for a very long period to all the economy’s industries and firms they may eventually hamper the reallocation of productive resources that may be necessary after the crisis. Finding the right balance between continuing to provide the necessary protection and maintaining a sufficient degree of selectivity will require the practically constant reassessment and adaptation of these instruments in coming quarters. At the same time, to facilitate structural adjustment, it is necessary to ensure that the various flexibility mechanisms that firms have available in the present employment framework are functioning properly. This is especially important in a context, like the one I have described, that is changing and surrounded by significant uncertainty. 4  There has been a certain recovery from the lows recorded in April (-10.5%). The evidence available from previous crisis episodes, which should be interpreted with caution as it relates to recessions very different from the current one, suggests that there is an appreciable risk that the decline in the number of registered firms in recent months may ultimately cause permanent damage to the Spanish productive system. In particular, in the past there has been a relatively high correlation between falls in the number of firms registered for Social Security and increases in the number of firms filing for insolvency. 16  However, as well as reorientation towards certain groups of agents, another change to the design of the support measures for households and firms that may be necessary in future relates to the specific instruments used.