, although it remains in negative territory, while the stock of unsold housing remains high. the outlook of progressively improving activity is closely linked to labour market developments, where the benefits of wage moderation and the improved incentives for job creation driven by the recent labour reform are becoming patent. the latest employment figures show a continuation of the positive trend discernible since the second half of 2013. thus, in recent months, social security registrations have continued to increase and the pace of decline of registered unemployment has stepped up. however, on the first - quarter figures for 2014, the unemployment rate remains very high, still close to 26 % of the labour force. the rate of inflation has been posting very moderate figures since autumn last year as a result of the removal from the index of the base effects linked to fiscal consolidation ; certain temporary factors, such as those relating to energy price developments ; and other more durable factors, relating to the economy ’ s excess capacity, the reduction in unit labour costs and the relative sluggishness of spending. for the remainder of the year the inflation rate is expected to hold at low levels, below the euro area average, thereby permitting further headway in gains in competitiveness with which to entrench a stronger recovery. low inflation is conducive to gains in income purchasing power, although the counterpoint to this is the greater difficulty this adds to further progress in household and corporate deleveraging. in the more immediate future, the advances made by the spanish economy augur a firming of the gradual path of recovery, underpinned by greater confidence, a progressive easing in financial tensions and a gradual improvement in the labour market. a crucial role will have to be played here by the re - balancing processes under way in the spanish economy, especially the redressing of the private sector ’ s financial position and fiscal consolidation. the successful culmination of these processes is pivotal for rooting the recovery in domestic and external confidence and for ensuring the external funding flows that are vital for making sustained medium - term growth possible. in sum, for the first time after years of crisis, we can discern the possibility of a gradual and sustainable recovery, the outcome of the progress made in correcting the imbalances that we had built up and of the structural reforms undertaken, whose results we are beginning to see. the task is not complete and much work remains to be done, both in europe and in spain. hopefully, however, the progressive perception of the

in recent months the markets have lowered their expectations in terms of the growth of european banks ’ profits. low or negative interest rates restrict the unit interest margin banks can obtain. however, from a general equilibrium perspective, they also increase credit, reduce bad debts and raise the value of the financial and real assets banks hold on their balance sheets. as a result, the net aggregate effect on bank profitability in general has so far been positive overall. that said, this effect will foreseeably diminish insofar as the situation of negative interest rates is prolonged over time. indeed, a positive note regarding the most recent developments in profitability is that net interest income has increased following years of stagnation at low levels. in any event, the decisions adopted by the ecb governing council at its meeting on 12 september, including the 10 bp reduction in the deposit facility rate to - 0. 5 %, the resumption of net purchases under its asset purchase programme and the strengthening of forward guidance, have been accompanied by mitigating measures. these include the application of a two - tier system for reserve remuneration, designed precisely to ensure the effectiveness of monetary policy transmission through the bank channel. there is also theoretical and empirical evidence that low interest rates transmit the monetary impulse by encouraging banks and other financial intermediaries to take risks. fortunately, we currently have various macroprudential policy instruments, which i shall refer to later, designed to mitigate the potential build - up of risks that may affect financial stability through this channel. so far, deposit institutions do not appear to be significantly increasing their exposure to risk, although there are some factors where we are exercising greater watchfulness. in fact, the total volume of lending granted by deposit institutions in spain to the nonfinancial private sector has continued to fall ( - 1. 2 % in june ), or shows muted increases when the construction and real estate development sectors are excluded. moreover, the debt ratios of the non - financial private sector have continued falling, standing at levels below the euro area average. specifically, the debt / gdp ratio of the non - financial private sector was slightly above 130 %, 3 pp down on a year earlier, and 2 pp less than the euro area average, having declined by more than 70 pp from its peak during the crisis. 5 / 10 in the case of non - financial corporations, overall external financing has continued to expand at year - on - year rates of close to 2 %, with