continue to worsen. further, they lead to the conclusion that the room for budgetary policy to expand has been completely exhausted, and that it is vital that a credible strategy of budgetary consolidation be adopted for the medium term. if not, the increase in public debt and its influence on the net borrowing costs of our economy, and even on the very soundness of the financial system and its capacity to properly channel resources, may become a very heavy weight holding back our possibilities of recovery. given the fiscal imbalance that has built up, the scale of adjustment needed is most sizeable and will therefore require the adoption of highly ambitious measures on all budgetary fronts. it will be constantly necessary to strike a difficult balance between appropriately signalling the commitment to budgetary stability and, at the same time, not curbing the path of economic recovery. past experience shows that the success of fiscal consolidation strategies hinges largely on their composition, so that cuts in public spending, especially non - productive spending, play an essential role in reducing the deficit. unproductive spending, both on consumption and investment, should therefore be particularly scrutinised and monitored. in any event, when structural distortions have become considerable, certain elements of the tax structure have inevitably to be revised. here it is vital to fully preserve efficiency in agents'saving and investment decisions, so that long - term growth prospects are not compromised. selecting tax measures is never easy, and less so when the tax base is being eroded ; consequently, tax instruments that cause least distortion should be used. in any case, we should ensure that increases in tax revenue are actually earmarked to reducing the budget deficit and not to financing potential spending slippages. the government has announced its intention to resume deficit levels compatible with stability in 2012, in line with the horizon defined by the european authorities in the application of the rules of the stability and growth pact. the state budget for 2010, the first to be prepared under this general consolidation strategy, confirms this commitment. it is along the lines required to give credibility to the process, although to ensure that the budgetary targets are realistic, all economic agents must be convinced that, in the event of deviations occurring, all necessary measures will be taken to achieve such objectives. lastly, and more clearly than on any other occasion, i must reiterate what i have said in all my previous budget - related appearances : given the high degree of decentralisation of the state in spain, it is of paramount importance

their relationship with customers. they alter consumer demands, with consumers now seeking flexible, immediate and personalised interaction anywhere and at any time. they also lower the entry barriers to the business, as the extensive networks of branches to capture and retain customers that characterised traditional banking no longer seem necessary. i consider that, as regards technological innovation, it is more fitting for the moment to talk about evolution rather than revolution, and that not all technological initiatives exert the same influence on banking business and nor do they necessarily constitute projects that enter into direct competition with banks. but there are indeed technological innovations that are acting as a catalyst for firms that may come to compete with banks in specific segments. and one segment where this may have a greater impact, and specifically alter the bankcustomer relationship, is that of payment services. bank customers and technology : the payment services segment. allow me to illustrate the changes emerging in this segment with a brief reference to the new directive on payment services, known as psd2, as i previously mentioned. 4 / 8 one of the most notable aspects of this directive is that it definitively institutionalises the activity of the so - called third - party service providers, or tpp. the directive acknowledges the right of holders of a payment account to expressly authorise a third - party entity, provided it is duly authorised, to order payments on their behalf and / or to consult certain information associated with this account. in the first instance, we are talking about what are known as “ payment initiation service providers ”, while in the second case they are called “ account information service providers ”. the latter offer users the possibility of gaining consolidated knowledge of the situation of the payment accounts the users have with different entities, thereby helping them with their financial planning. conversely, payment initiation services arise as an alternative to the use of cards, for the payment of purchases made in e - commerce environments. they are consequently characterised by providing payment beneficiaries with the security that payment has been initiated correctly, acting as a spur for expediting the delivery of the good or service. with the emergence of tpp, psd2 makes it possible to dissociate administrative tasks – proper to the opening, maintenance and management of an account – from those others which generate revenues for banks thanks to the existence of those accounts. in this way the traditional role of banking as a single, or main, payment services provider is diluted. tpp are now legally authorised to gain access to banking