and those most affected by the crisis might have difficulty gaining access to financing, especially in the absence of public support instruments. in turn, incentives must be gradually restored so that financial resources may be reallocated to those firms and sectors that can most contribute to the recovery in activity and employment. this advises studying the possibility, depending on how economic activity evolves, of extending the public guarantee mechanisms. in re - designing the latter, priority of access to such resources should be for firms with sound viability prospects. the crisis will significantly impact banks ’ credit portfolios. the declines in gdp projected for 2020 under the scenarios previously outlined exceed those of any stress test in the past ; yet it is true that, if the rebound in activity forecast for 2021 and 2022 were to materialise, this severity would be significantly mitigated. moreover, the crisis will affect banks differently in terms of their business model and of the distribution of their exposures to the sectors and regions most affected by the pandemic. overall, then, we must remain vigilant to stave off the risks to financial stability derived from this crisis, and be ready to respond forcefully at the european level if these risks materialise. second, in the domestic arena, some of the measures already applied should be temporarily extended and recalibrated. it seems right to retain some of the income support instruments for the most vulnerable households, though it is essential they remain focused and designed so as not to distort, for example, labour market participation decisions. it would also be wise to extend furlough - like schemes in certain sectors and firms that will continue to be very affected by social distancing measures. and, in parallel, the various flexibility mechanisms available to firms should be ensured, as their role is particularly useful for allowing potential structural adjustments derived from the crisis. third, new measures should be taken in several areas, such as those relating to active labour market policies and to training for the unemployed and for temporarily furloughed workers. the aim of these measures would be to maintain their employability and smooth their reinsertion into sectors or firms with greater growth capacity. the suspension of face - to - face education risks prompting an adverse impact on students ’ academic performance, particularly in lower - income households. consequently, the education system requires mechanisms allowing students to acquire the necessary skills and qualifications, albeit in the absence of presence - based education. likewise, there is a pressing need to review restructuring, insolven

##cy and debt burden - relief processes for firms. flexible and simplified administrative procedures must be set in place. specifically, ailing debt - laden firms should have the capacity to move into a preventive framework enabling them to pursue their business activity while they are still viable. fourth, a fiscal impulse should be added in the initial phases of the recovery, also giving support to the restructuring of our productive system. here it would be advisable to prioritise the use of any future european recovery fund for specific investments that contract more at times of uncertainty and financial difficulty. such is the case of investment in technological capital and in training. the time is also right for pushing through projects that contribute to the transition to a more sustainable economy. the size of this european fund should be proportionate to the public spending financing needs generated by the pandemic ; indeed, the fund ’ s approval and launch should be expedited. 4. the design of an ambitious structural reform agenda beyond these short - term measures, we need to define an ambitious structural reform agenda, aimed at increasing the economy ’ s potential growth. let me briefly outline what, in my view, the content of this agenda should be. 4. 1. improving productivity dynamics firstly, the main determinant of the spanish economy ’ s low potential growth is lacklustre productivity growth. in the past 20 years, spanish total factor productivity has grown at an average annual rate of 0. 2 %, far below germany and the united states. it is therefore a priority to improve the dynamics of this variable. i shall focus on three aspects which, across the spectrum, determine these productivity gains. promoting business dynamism and growth, and raising the degree of sectoral competition the spanish economy is characterised by the small size of its firms. and it is precisely in spanish smes that we see a high, negative productivity gap with their european counterparts. boosting their growth would not only help increase productivity ; it would also enhance the financial soundness of the business sector. we must ensure here that the objectives behind all the regulations that introduce a degree of size - based business discrimination are compatible with competition and do not pose obstacles to business growth. deeper - seated improvements to the regulatory framework must be sought so as to converge on the best practices our peer economies boast. the indicators available show there is room for improvement as regards business start - up formalities, the regulations governing some sectors ( such as the retail trade and certain transport and professional services segments