There are various ways to learn about how an economy is performing.
At the Bank of England we have access to many sources of data which are analysed by our teams of economists. But numbers can only tell you so much. Sometimes there is no substitute for getting out and about and talking with and listening to people.
These conversations are a rich source of information, giving a sense of what is weighing on people’s minds as they make decisions on whether to spend, save, invest or consume.
There are times when such insights are particularly valuable. For example, when the data, which tends to say more about what’s already happened than what will happen in the future, is more volatile than usual.
We are living in those times now.
I don’t need to tell you that this is a difficult period for the UK economy. Everyone is feeling it – many people acutely. Inflation is currently much too high and it’s our job to bring it down, which we will.
I chair the Bank’s Court, which is our equivalent of a company board. It has a diverse membership including people with experience of finance and business, as well as the previous general secretary of the Trades Union Congress.
My job does not involve setting policy, but I am responsible for how the Bank is run.
To fulfil that role, it is important that I spend time with Bank colleagues who are based around the United Kingdom. These visits are also an opportunity for me to join some of the conversations they are having every day with businesses and charities, as well as members of the public, to get a richer understanding of how the economy is functioning.
Recently I was in North East England and West Yorkshire doing just that.
We’ve had a presence in Newcastle and Leeds dating back to the 19th century. However, we’ve recently moved into larger premises where we have more colleagues working in a range of roles, most of which have traditionally been done from London. They work alongside our Agency teams who lead our engagement with businesses in the regions. We’re grateful to their hundreds of contacts from businesses large and small who help to keep them so well informed, so that they can feed that information directly to our policymakers.
During my visit I met with a variety of businesses, took part in a Citizens’ Panel, hosted a Community Forum with members of the Leeds Financial Inclusion Group and visited a couple of schools.
The Citizens’ Panel event organised in partnership with the National Innovation Centre for Ageing in Newcastle, was open to those aged 55 or over and, as well as discussing the cost of living, we explored how money is changing with the shift from cash to digital payments.
It is vital that the Bank hears from people in this age group about these changes as we think about the future of cash and consider the case for developing a ‘digital pound’. The digital pound (sometimes known as a central bank digital currency) would be a new type of money issued by the Bank of England for everyone to use for day-to-day spending. You would be able to use it in-store or online to make payments.
If we introduced it, and I should say that no decision has yet been made, it would not replace cash. We know being able to use cash is important for many people, a point that was reiterated at our session in Newcastle. That’s why we will continue to issue banknotes for as long as people want to keep using them. You can read more about the digital pound.
This point was also raised during my Community Forum with members of the Leeds Financial Inclusion Group.
Access to cash and banking services is vital for the most vulnerable in our society. The group is an open forum set up by the Leeds Council in 2005 to bring together organisations from across sectors to discuss issues like access to free debt advice and affordable financial services. It ensures services and projects are influenced by the people they are aiming to support. Times are particularly difficult for lower-income families; household bills and grocery costs are causing people to turn to various loans and payment schemes.
Other key messages from the meeting included the large increase in service users particularly for advice charities and foodbanks, funding difficulties across the third sector, recruitment and retention issues as well as the decline in corporate and personal donations.
A common theme from our Community Forum and Citizens’ Panels across the UK is the growing importance of financial education. The Bank has developed resources for both primary and secondary schools to help youngsters learn the skills required to make sound financial decisions. So I was delighted to visit two schools – Laygate Primary in South Shields and Lawnswood School, a secondary school in Leeds – as part of my trip.
On the train north from London I’d been provided with a comprehensive set of reports about the economies of the cities and regions I was visiting from our Agents.
But it was the conversations I had while there that really helped me get a sense of how people and businesses are feeling, and what that might tell us about the economic outlook.
Proof of the value of listening.