been fundamental. in this regard, since the degree of economic and financial interdependence within europe is very high, joint action is clearly the most effective means of ensuring that the economic effects of the pandemic are overcome within a short period and at a lower cost for each and every country. taking this into account, the european council has agreed on a european recovery fund ( next generation eu ). the fund will be financed on the capital markets, with the european commission borrowing, on behalf of the union, an amount of up to €750 billion between 2021 and 2026. the spending and investment arising from the use of this fund will be pivotal to entrenching the economic recovery and reducing the potentially permanent consequences of the crisis. nor should we forget the reaction of micro - and macro - financial supervisory authorities, which has also been crucial. first, supervisory processes have been adapted to free up banks ’ operational resources so that they may be used to ensure business continuity. in this respect, at the international level, the basel committee on banking supervision ( bcbs ) decided to delay by one year ( from 2022 to 2023 ) the implementation of basel iii. in the accounting sphere, certain aspects relating to how the existing regulations should be applied to calculate credit risk have been clarified, to ensure that potential temporary delays in loan repayments by borrowers are not treated as if they were a case of permanent impairment of loan quality. the authorities have also ruled that institutions may make effective use of their available capital buffers to absorb unexpected losses. it was further announced that institutions will have sufficient time to subsequently restore any capital buffers used. in addition, financial authorities have recommended that institutions temporarily eliminate dividend pay - outs and apply prudent criteria in their variable employee compensation schemes, so that they may channel their resources into shoring up their capital positions. all in all, we can say that this response from the prudential authorities, accompanied by the fiscal and monetary policy measures adopted, has enabled the initial impact of the shock to be absorbed. it has prevented the materialisation of a systemic risk in the financial system that would have exacerbated the crisis and made it more persistent. what about the current situation? we are living a recovery that is still partial, full of uncertainty and uneven, both at the country and sectoral level. and indeed not only are restrictions still in force in some areas of activity, but it is also proving necessary to reintroduce

. regardless of the importance of the mild winter in distorting the economic data, real economic activity has yet to be strong enough on a sustained basis to make a big dent in the overall amount of slack in the u. s. economy. while growth was stronger in the fourth quarter, most of it was due to inventory accumulation. growth of final sales remained quite weak. historically, quarters in which inventory investment makes significant growth contributions are typically followed by quarters in which that growth contribution is modest or even negative. that appears to be what is shaping up for the first quarter of this year. based on available data, our current expectations are that real gdp will expand at around a 2 ¼ percent annual rate during the first quarter of 2012. even with the robust increase of light vehicle sales, overall consumer spending in the first quarter appears to be rising at a similar moderate rate. at the same time, real disposable income has been flat over the past three months, and the large increase of gasoline prices is likely further sapping consumers ’ real purchasing power. and growth of business investment spending, which softened in the fourth quarter of 2011, may have been even a little softer in the first quarter of this year. to put the recent pace of growth into perspective, we believe that the economy ’ s long - run sustainable growth rate – what economists call the potential growth rate – is around a 2¼ percent annual rate. we need sustained growth above that rate to absorb the still substantial amount of unused productive capacity. thus, our recent growth rates are barely keeping up with our potential. bis central bankers ’ speeches even though the unemployment rate has declined sharply from 9 percent last september to 8. 2 percent in march, it is still unacceptably high. in addition, many other measures of the labor market remain weak. the labor force participation rate, the percentage of people employed, and the total number of hours worked in the economy all dropped sharply during the recession and remain well below their pre - recession levels, even taking into account the impact of demographic shifts. also, it appears that productivity growth has slumped recently. although that means that a given amount of growth translates into bigger employment gains, it certainly is not an unmitigated positive development. also, we cannot lose sight of the fact that the economy still faces significant headwinds and that there are some meaningful downside risks. in the headwinds department, i would include the run - up in gasoline prices mentioned earlier because that will