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Home > News and Publications > Summary of Quarterly Bulletin 2006 Q4

Summary of Quarterly Bulletin 2006 Q4

11 December 2006


Each article is available as a separate pdf file; click on the appropriate title to access the relevant file. Alternatively you may download the complete issue (5.05mb).

Markets and operations (1.3mb)
This article reviews developments since the Q3 Quarterly Bulletin in sterling financial markets. It summarises asset price movements in conjunction with market intelligence gathered from market contacts, and evaluates them in the context of the Bank's core purposes. The article also outlines changes in market structure and reviews the Bank's official operations.

Research and analysis

Research work published by the Bank is intended to contribute to debate, and does not necessarily reflect the views of the Bank or of MPC members.

The economic characteristics of immigrants and their impact on supply (638k)
(By Jumana Saleheen and Chris Shadforth of the Bank's External MPC Unit). Immigration to the United Kingdom has risen rapidly over the past decade, driven most recently by flows from the ten EU Accession countries. Monetary policy makers are interested in the impact of immigration on the macroeconomy and inflation. An increase in the number of immigrants, other things being equal, would raise the supply potential of the economy. But the extent to which potential supply increases will depend on the economic characteristics of immigrants. This article investigates the characteristics of immigrants, particularly new immigrants - those who have entered the United Kingdom in the past two years. It appears that new immigrants are more educated than both UK-born workers and previous immigrant waves, but are much more likely to be working in low-skilled occupations. The increasing share of new immigrants in low-skill, low-paid jobs seems to have led to the emergence of a gap between the wages of new immigrants and UK-born workers. The implications of these findings for overall productivity and the supply side of the economy are complex.

Recent developments in sterling inflation-linked markets (620k)
(By Grellan McGrath and Robin Windle of the Bank's Sterling Markets Division). Sterling inflation-linked markets have developed rapidly over recent years, both in size and complexity. These changes have been driven by increased demand, especially from institutional investors such as pension funds, which has stimulated new supply as well as the rapid development of the market for inflation swaps. This article surveys these developments and considers their implications, in particular for the way risk is transferred between market participants and the interpretation of observed market rates. Market contacts suggest the increases in activity and the number of participants have enhanced efficiency in these markets, although the timing of demand and supply flows can still influence observed market prices. Looking ahead, there are considerable uncertainties as to the size of future demand and supply in the market.

The state of British household finances: results from the 2006 NMG Research survey (489k)
(By Matt Waldron and Garry Young of the Bank's Monetary Assessment and Strategy Division). This article summarises the key results from the latest survey carried out for the Bank by NMG Research about the state of household finances. There was little change in the proportion of households who reported problems with their unsecured debt, although there was a small increase in the proportion of mortgagors having difficulty paying for their mortgage. The share of overall income accounted for by households reporting either type of problem was relatively small, suggesting that any impact on aggregate consumer spending is likely to have been muted. The most common explanations given for debt problems were temporary cash-flow shortfalls and overspending; the most popular way of resolving these issues was to cut back spending. Very few households said they considered bankruptcy a solution to their debt problems.
The raw survey data are available in Excel format (944kb)

Measuring market sector activity in the United Kingdom (550k)
(By Rohan Churm, Sylaja Srinivasan and Ryland Thomas of the Bank's Monetary Analysis Division, and Sanjiv Mahajan, Fenella Maitland-Smith and Geoff Tily of the Office for National Statistics (ONS)). A measure of private or market sector activity is useful for assessing demand pressures and productivity trends in the economy. This article discusses the practical issues involved in constructing a measure of the market sector's gross value added (MSGVA) for the United Kingdom. It looks at the existing estimates currently constructed by the ONS and the Bank of England using National Accounts data, and discusses how the Bank of England uses these estimates when analysing demand pressures in the economy.

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