total cost, including the risk premium. i should like to highlight this latter aspect of price - setting policy at the level of products or services since, traditionally, services that are not explicitly charged and whose cost has been covered by the net interest margin have been provided to customers. i believe it is important to introduce transparency and rigour into price - setting. without it, the reality of the business is distorted as is, consequently, the attendant analysis, and informed decision - “ ssm thematic review on profitability and business models. report on the outcome of the assessment. ”, september 2018. 3 / 8 making is hampered. not in vain, in the aforementioned thematic review price - setting is included among the areas where the ssm recommends making improvements. i would further stress that, in this comprehensive analysis of the bank ’ s accounts, there should be some thought on the weight of operating expenses. unquestionably, spanish banks have made a great effort in terms of capacity adjustment in recent years. numbers of staff and offices have fallen approximately by 32 % and 40 %, respectively, from their 2008 peaks. it is necessary to continue paying attention to these expenses, so as to ensure they are in step with developments in lending activity and in revenue. against this background, progress in new technologies, and the alternatives these offer to the traditional means of providing bank services, may prove an opportunity to cut costs and come into line with the change under way in the customer - bank relationship. however, the digitalisation path should be pursued after a cost - benefit analysis, having regard to the risks and additional costs that are taken on. it should, moreover, be accompanied by processes that allow for the identification, monitoring and mitigation of such risks, in such a way that ensures they are included in price - setting models. in sum, any effort geared to obtaining comprehensive knowledge of the profitability of the activity being pursued and to refining price - setting processes with a long - term vision will be time well spent. that said, while the foregoing condition is necessary for ensuring sustained, profitable activity over time, it is not however a sufficient one. the analysis must, moreover, be strategically oriented to anticipating future changes. reflection is needed on the capacity of banks to manage and strategically focus the business. a strategic reflection reflection on the business model should allow medium and long - term objectives to be set and a path plotted towards attaining these objectives. appropriate business models are those that generate recurring and sustained profitability

zero or even negative quarter - on - quarter rates of change in the second half of the year, and to the extension of the adjustment into 2009, with rates of increase in output that are more difficult to gauge but which will probably also be weak. the ongoing correction of residential investment may be expected to intensify, since the figures for work under way will show next year that housing starts have ground to a halt. it is likewise foreseeable that the slowdown in consumption will continue, due above all to the weakness of employment, and that business investment will mirror the decline in activity. accordingly, the contribution of domestic demand to gdp growth might turn negative, and would only be relieved by the external sector if the buoyancy of exports and, as seems likely, the slowdown in imports continue. the importance that the dynamising effect of the external sector acquires in the current circumstances highlights the relevance of competitiveness in the future. the foreseeable trend of inflation points to increasingly more moderate average price increases during the rest of the year, owing largely to the baseline effects of the energy and processed food price increases late last year and to the recent declines in crude oil prices, provided these are sustained. this trajectory should extend over the coming year, further supported by the sluggishness of demand. however, to attain fuller and more sustainable convergence with the euro area, the upside risks stemming from the indirect and secondround effects of cost and price increases this year must be prevented from materialising. the macroeconomic basis on which the government has drawn up the state budget for 2009 includes, in its main outline, the trajectory of the macroeconomic adjustment i referred to earlier. but it is subject to major downside risks, especially as regards the course of domestic demand and, in particular, of residential investment. it should further be borne in mind that the global economic situation and the impact of the international financial turmoil tend to heighten these risks. the design of the budget should take into consideration the pronounced change in the economy ’ s cyclical situation, and bear in mind the speed at which public finances are being affected. in previous public appearances i have warned that the sound fiscal results of the previous years had a component very closely linked to the expansion of the real estate sector, which would tend to disappear in lower growth phases. unfortunately, the loss of momentum of tax revenue is proving acute. and combined with the significant revenuerelated impact of the expansionary measures taken this year