Exceptionally and at least during the crisis, then, consideration should be given to the possibility of introducing a simple and permanent employment-promoting contract, that can be used for all new hires and under an unemployment protection regime that does not discourage recruitment. But the possible urgent measures I have outlined should not sideline either far-reaching reforms of our labour institutions or other major structural reforms that the Spanish economy needs. Indeed, the strength and sustainability of the recovery will largely hinge on the scope and rapid application of such reforms. Further, if they are tackled in sufficient depth, the excesses committed in the past decade will be avoided and the resources available may be assigned to more productive uses. Many proposals have been made in this connection, but I shall only mention those I consider important. One aspect of paramount importance is the development of the rental market. And this is not only because it would notably increase the possibility of matching job supply and demand, but also because it would contribute to providing an outlet for unsold housing and to reducing rental costs in a setting in which housing may not be readily affordable. To do this it would be necessary, first, to ensure that the various measures adopted to improve legal security for owners are actually effective; and, further, to liberalise certain features of the current legislation, such as those relating to contract length. Measures in the so-called network industries are likewise necessary.
To sum up the international picture: over the past year, growth prospects have been lowered for all the large advanced regions. In Europe, activity is likely to decline this year owing to debt problems and fiscal tightening. Unemployment is on the rise. Fiscal and monetary policy space is limited, or virtually exhausted. Many countries must tighten fiscal policy to reduce debt to a sustainable level. Central banks have responded by communicating that interest rates will be held low for an extended period. And they have stretched the limits of monetary policy to counteract a deeper and more persistent downturn. Chart: GDP growth The economic situation in our external surrounding environment stands in contrast to that of Norway. Domestic activity is particularly high in the oil industry and construction sector, and both employment and the supply of labour are on the increase. Unemployment remains low and stable. Public finances are healthy. Norway’s terms of trade are favourable, with high export prices and low import prices. At the same time, house prices and household debt are still rising. Nonetheless, the Norwegian economy is not unaffected by the turbulence abroad. Developments in Europe and a strong krone exchange rate are adversely affecting some Norwegian export industries, such as the paper, metal, and furniture industries. While other countries have used nontraditional instruments, we have managed to come through by using our main instrument – the key policy rate – which is now 1.5 per cent.