Archive

UK Paying More for Fewer Workers

• UK unemployment jumped surprisingly far in February 2024 to hit 4.2% as employment fell. More long-term jobless suggests this is neither a new shock nor too disinflationary.
• Average earnings growth surged by 0.7% m-o-m, meaning the wage bill still rose despite fewer jobs. Regular pay growth is in rude health at 6% y-o-y or 2.1% in real terms.
• Wage settlements are stuck at 5%, with a skew higher into April. Embedded inflation expectations are too high and demand tight policy despite some cyclical softening.

By Philip Rush

Breeden - Modernising the trains and rails of UK payments

Amidst the prospect of significant technological change in payments, Sarah sets out how the Bank of England seeks to deliver trust and support innovation, both as a provider and as a regulator of retail and wholesale money. She discusses the first-order threats and opportunities facing central banks and the private sector.

In this speech, Sarah Breeden discusses the technological advancements in money and payment systems and how the Bank of England is looking to capture the benefits of these advances while ensuring safety. She highlights the potential of tokenization and distributed ledger technology in improving retail and wholesale payments, mentioning examples like Libra's proposal for cross-border payments and the potential for lower-cost micropayments. Breeden also emphasizes the importance of enhancing wholesale payments and settlement, particularly through innovative central bank infrastructure. Additionally, she discusses the exploration of retail central bank digital currency (CBDC) and encourages banks to take action in payments innovation.


Positivity: 85
Uncertainty: 70

Europe, The Elections And The Economy

• Although the centre seems set to hold in the upcoming European Parliament elections, a strong performance by nationalist parties, especially in France and Germany, could hinder Europe’s ability to revive its stagnant economy, especially in the face of new external threats.

By Alastair Newton

Elderson - “Know thyself” – avoiding policy mistakes in light of the prevailing climate science

Keynote speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the Delphi Economic Forum IX

In his keynote speech, Frank Elderson discusses the use of evidence from climate and nature science to inform the actions of public authorities, including central banks and supervisors. He highlights the urgency of addressing climate risks and the need for decisive action to prevent catastrophic levels of climate hazards. The speech emphasizes the economic and structural challenges associated with failing to meet the goals of the Paris Agreement, including the need to upgrade and adapt existing capital stock. Elderson also emphasizes the importance of a sound banking system and well-developed capital markets to mitigate financial bottlenecks and ensure proper pricing of climate-related risks. He concludes by stressing the potential impact of climate risks on monetary policy transmission and the need for policymakers to prepare for future risks while striving towards the goals of the Paris Agreement.


Positivity: 70
Uncertainty: 80