World economic prospects - Governors speech at the Overseas Bankers Club

Quarterly Bulletin 1981 Q1
Published on 01 March 1981

After referring to the Bank of England's role in the arrangements that led to the release of the US hostages, the Governor comments on the world scene and the better response of the world economy to the second oil shock than the first. Looking ahead, he sees the possibility of some world economic recovery in late 1981, if there are no major new shocks. After noting that expectations are less buoyant than in earlier cycles, he identifies three possible constraints on growth: problems of energy, the financing of external deficits and the danger- 'still very present '-of continuing inflation.

In the midst of general exchange rate instability, he welcomes ' ... the extent to which the exchange rate regime of the European Monetary System has provided relative stability for its members between themselves .... Let us hope that ... conditions in the United Kingdom will become conducive to our own participation in the arrangements at the proper time ' .

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