in certain services such as hospitality, which is particularly affected by the social distancing measures. moreover, in absolute terms, the sizeable fall in actual registrations in this sector is indicative of the importance of tourism for spain ’ s economy. see box 1 ( “ macroeconomic scenarios for the spanish economy ( 2020 - 2022 ) ” ) in the “ quarterly report on the spanish economy ”, economic bulletin, 3 / 2020, banco de espana. in the coming quarters employment, in terms of hours worked, is expected to follow a very similar path to that of economic activity, showing declines of over 10 % in 2020 and a subsequent recovery. meantime, the increase in unemployment is being contained in the short term by the resort to furlough arrangements. in annual average terms, the unemployment rate is expected to rise significantly this year ( to 17. 1 % of the labour force under the first scenario and to 18. 6 % under the second ) and also in 2021, before starting to descend in 2022 ( when, in annual average terms, it would stand at 18. 2 % and 20. 2 % under the respective scenarios ). both scenarios forecast inflation to hold at a moderate pace over the projection horizon. core inflation has slowed notably in recent months as a result of the weakness of demand stemming from the pandemic. looking ahead, the persistence of a high degree of cyclical slack will mean inflation in non - energy industrial goods and in services will continue to run at relatively low - though growing - rates until end - 2022. the risks underlying the scenarios for economic activity published by the bank remain tilted to the downside. and more unfavourable developments than those contained in the second scenario, i. e. the harsher of the two considered, cannot be ruled out. in particular, in light of the recent course of the pandemic, we cannot preclude the resort to more severe lockdown measures than those envisaged in the scenarios. moreover, there is much uncertainty over how long will be needed before we have an effective medical treatment, and there are some risks that it will be delayed beyond mid - 2021. lastly, uncertainty remains on the external front, especially concerning the possibility of the brexit negotiations concluding without an agreement at the end of the transition period or of us - china trade tensions worsening. however, as i shall set out later, the launch of the next generation eu ( ngeu ) european recovery fund, which was

fernando restoy : the financial sector and the banking union speech by mr fernando restoy, deputy governor of the bank of spain, at the circulo financiero, organised by la caixa, barcelona, 18 may 2015. * 1. * * introduction good evening. it is a pleasure to visit barcelona again and an honour to stand on this rostrum at the circulo financiero, which has borne witness to the key debates affecting catalonian, spanish and european society over the past forty years. allow me to thank the organisers and, in particular, isidro faine, for the opportunity to participate in this forum. following isidro ’ s suggestion, i have decided to share with this eminent audience tonight some thoughts on the transformation the spanish banking system has undergone. i think the current juncture is a most timely one for addressing the subject : in july three years will have elapsed since the signing of the memorandum of understanding ( mou ), which marked the start of the financial assistance programme, approved by the european authorities, under which a most substantial portion of the reforms to the spanish banking system were undertaken. six months have likewise gone by since the single supervisory mechanism commenced operating in the euro area, and the single resolution mechanism has now been set up. these landmarks make for an appropriate setting both for reviewing the scope of what has been achieved and, naturally, for discussing the challenges ahead for spanish banks in the new economic and institutional environment of which the banking union is a key part. i shall structure my address around four simple questions. what were the problems of the spanish banking system? what was done to try to resolve them? what results were achieved? and, finally, what is left to be done and what challenges lie ahead? 2. the problems looking back, the crisis can be seen to have had an enormous impact – one not yet fully absorbed – on levels of employment and well - being. likewise apparent are the significance of the banking sector in the development of the crisis and the efforts taxpayers have had to make to restore financial stability. and in this light, it is difficult to avoid having a very negative perception of the functioning of the banking system in the run - up to the crisis. that said, the spanish banking industry has, traditionally, been a rather profitable one, capable of successfully pursuing a very effective commercial banking model, of developing valuable franchises built on a highly stable customer base and, in the case of the biggest