See the report written by the Productivity Leadership Group, chaired by Sir Charlie Mayfield, (2016), ‘How good is your business really? Raising our ambitions for business performance’, available at: https://howgoodisyourbusinessreally.co.uk/. 20 See ‘The world trade slowdown redux’, Bank Underground blogpost, available at https://bankunderground.co.uk/2016/12/12/theworld-trade-slowdown-redux/ and Frenkel, J. and Rose, A. (2000) ‘Estimating the Effect of Currency Unions on Trade and Output’, NBER working paper No. 7857. 21 As noted in ‘The Spectre of Monetarism’, speech given by Mark Carney, Roscoe Lecture, Liverpool John Moores University, 5 December 2016, available at http://www.bankofengland.co.uk/publications/Pages/speeches/2016/946.aspx. 19  8  All speeches are available online at www.bankofengland.co.uk/speeches  8  In this context, Brexit in general and financial services in particular will be key tests of the world’s capacity to build a path to stronger, more sustainable growth. IV. Levelling Down or Up: Managed Trade or Free Trade in Services? One cause of global imbalances is the uneven playing field between trade in goods and services, with barriers to services trade currently up to three times higher. 22  Most of the world’s major surplus countries, like Germany and China, are net exporters of goods and benefit from this asymmetry. Conversely countries with a comparative advantage in services, like the US and UK, are more likely to run current account deficits (Charts 5 and 6). Chart 5: Correlation between current account balances and comparative advantage in services  Sources: Barattieri, A. (2014), ‘Comparative advantage, service trade, and global imbalances’, Journal of International Economics, Vol. 92, Issue 1, UNCTAD and WEO April 2017.

Finally, I must mention that the New York Fed’s district could be the most diverse in the System: ranging from the urban density of New York City to the forested sparseness of the northern Adirondacks, to the Caribbean islands of Puerto Rico and the Virgin Islands. All in all, there is a lot to keep my colleagues and me quite busy – even in normal times. U.S. economic outlook Now, what is the outlook for economic activity, employment and inflation? In particular, what are the areas of vulnerability that we should be most concerned about? I am pleased to say that the economic outlook has improved considerably in the past six months. Despite this, we are still very far away from achieving our dual mandate of maximum sustainable employment and price stability. Faster progress toward these objectives would be very welcome. On the activity side, a wide range of indicators show a broadening and strengthening of demand by households and production by firms. For example, on the demand side, families boosted their real consumption at a 4.1 percent annual rate during the fourth quarter. This compares with only a 2.2 percent annual rate during the first three quarters of 2010. Not surprisingly, businesses’ orders and production are following suit. And this revival in activity, in turn, has been accompanied by improving consumer and business confidence. These contributed to a 2.8 percent growth rate in our most comprehensive measure of national output (real gross domestic product or GDP) in the fourth quarter of 2010.