Text based on a speech in Port Talbot, Wales on 30 June 2016
It is a great pleasure to be here in Port Talbot. I want to discuss the UK’s economic fortunes. The past few weeks have been dominated by the run-up to the EU referendum vote and its aftermath. This has generated considerable uncertainty about the economy, about policy and about politics – a heady cocktail. I will come to those uncertainties, and their implications for monetary policy, at the end. But I wanted to start by assessing the UK’s economic recovery so far, as this provides important context for what happens next.
Last year I visited Nottingham on one of my regular regional visits. As with today’s, these visits are crucial for helping the Bank of England make sense of the economy. My first stop was a lunch for local business people. There, I spoke about the recovery in the UK economy over the past three years, the dramatic improvement in the jobs market and the high degrees of confidence among companies and consumers. This met with several knowing nods, a few furrowed brows and some gently probing questions. Overall it seemed we were all on the same economic page, if not always on the same paragraph or line.
My next visit was to a community centre in Nottingham with half a dozen local charities and community groups. This was something of a new departure for me. Typically, the Bank’s regional visits have tended to focus on company contacts in the public and private sectors. I hoped speaking to this different group of organisations, drawn largely from the voluntary sector, might provide me with a different perspective on the fortunes of the economy, the jobs markets and degrees of confidence in the recovery. It did not disappoint.
I began by speaking about the UK’s economic recovery. I never got as far as the improvement in the jobs market or surging confidence. I was stopped in my tracks by a forest of furrowed brows and a phalanx of probing questions, not all of them gentle. “What exactly do you mean by recovery?” one asked. “My charity is dealing with 50% more homeless people than three years ago.” Every other charity in the room had similar stories to tell. Whether it was food banks, mental health problems or drug addiction, all of the numbers were up. The language of “recovery” simply did not fit their facts.
On subsequent regional visits, including this one in Wales, talking to companies, community groups and charities, I have encountered the same conundrum. For many, the economic recovery is visible and tangible - in sales, in jobs, in investment. But for others it is barely visible and for some non-existent. How to reconcile the macro data with these micro accounts? Were these stories outliers? Or was I neglecting an important missing ingredient in the UK’s economic fortunes? Put differently, whose recovery were we actually talking about?