Cross-border bank lending and mutual fund asset data are from 2014; all other data is from 2013. Source: BIS, City UK, IMF’s GFSR, Bank calculations. Source: Radcliffe Report (1959), Wilson Report (1980), ECB, OECD, Swiss National Bank and Bank calculations. 10  BIS central bankers’ speeches  Chart 5: Foreign suppliers receive close to equal treatment to domestic firms in the UK(a)  Chart 6: UK administrative burden on startups second lowest in G7(a)  Source: OECD (2013), Product Market Regulation Database. Source: OECD (2013), Product Market Regulation Database. Chart 7: Incumbent firms least protected in UK(a)  Chart 8: UK product market least heavily regulated in G7(a)  Source: OECD (2013), Product Market Regulation Database. Source: OECD (2013), Product Market Regulation Database. BIS central bankers’ speeches  11  Chart 9: UK employment protection in middle of the G7 pack(a)…  Chart 10: … while securing favourable labouremployer relations compared to Japan and Germany(a)  Source: OECD Employment Protection Legislation. (a) Indicator based on responses to the following question in the WEF Executive Opinion Survey: “In your country, how would you characterize labour-employer relations? (1 = generally confrontational; 7 = generally cooperative)”. Source: WEF Global Competitiveness Report 2014. Chart 11: UK still has work to do to close the gap between its productivity level and world frontier, but growth since 1970 compares favourably(a)  Chart 12: Firms report FDI as a channel for technology transfer, particularly in the UK(a)  (a) Output per hour measured in 2014 $ with price levels converted using 2011 PPPs.

Greatly increased financial openness, in part associated with EU membership, has made the UK financial system larger, more complex and more exposed to shocks from abroad. These developments reinforced domestically generated vulnerabilities in the run up to the Global Financial Crisis. The UK, along with many of its main international partners, lacked the institutions and tools for managing and addressing them when they crystallised. As a result, when the crisis hit, global shocks were transmitted virulently across borders, doing great damage to the financial systems and real economies of many countries. The UK was particularly affected given its high degree of financial openness. Most recently, challenges arising from European Monetary Union (EMU) have been particularly evident. Our ties are close. 40% of our exports go to the euro area, and major UK-owned banks have financial exposures to the euro area totalling almost twice their capital, worth a quarter of UK GDP. These figures underscore the importance to the UK of further building the resilience of the euro area as part of a strengthened European Union.9 In this regard, the progress made in recent years is particularly welcome. Nonetheless, as highlighted in the European Commission’s “Five Presidents’ Report”, the euro area remains “unfinished business.”10 Actions to complete European Monetary Union should be taken with regard to their impact on all members of the European Union. From the Bank of England’s perspective, steps to ensure financial stability for those within the euro area should not impede the achievement of financial stability for those without, including the United Kingdom.