– the 2010 q3 survey indicated that a majority described credit as easily available for the first time since the survey began in mid - 2007. has been maintained at £200 billion. although monetary policy has not been eased substantially further over the past year, the stance of policy remains highly stimulatory and continues to provide significant support to economic activity. the level of sterling following its substantial depreciation through 2007 and 2008 should also aid the recovery by encouraging a rebalancing of our economy towards external demand. however, at first blush, the support provided by the lower level of sterling over the past year looks distinctly underwhelming. yes, the most recent data suggest that net trade made a positive contribution to growth in the third quarter of this year and this is encouraging. but these early estimates are noisy and prone to revision. stepping back, net trade has detracted from growth over the past year. and within that, the growth of exports has underperformed expectations, especially when judged against the acceleration in global demand. however, the story is somewhat different if we look at the performance of goods and services exports separately. the lower level of sterling does appear to have supported goods exports, which have increased by well over 10 % over the past year. perhaps more tellingly, the increased competitiveness of our goods exports has succeeded in arresting the persistent decline in our share of world export markets seen over the past 15 years or so. in contrast, exports of services – at least as measured – have fallen. these declines are concentrated in exports of financial and business services, areas in which the uk has particular expertise. it would not be surprising in the current environment if this weakness partly reflects reduced global demand for these types of services. if that is the case, our prospects for net trade will depend in part on the extent to which demand for financial and business services revives as the recovery in world demand continues and the functioning of the financial system gradually returns to normal. where does all this leave us? judging the net impact of these opposing forces on the growth outlook is very difficult. the pattern of growth from quarter to quarter is quite likely to be choppy. but smoothing through this, my central view is that over the next few years the economy is likely to grow at rates around or a little above its historical average, supported by monetary policy and the lower level of sterling. this is similar to the outlook in the november inflation report. but to repeat the point i made earlier : the

spencer dale : 2010 – a progress report speech by mr spencer dale, executive director and chief economist of the bank of england, at the kent business school 21st anniversary dinner, canterbury, 1 december 2010. * * * i would like to thank ryan banerjee, rohan churm, and geoff coppins for their considerable help in preparing this speech. the views expressed are my own and do not necessarily reflect those of other members of the monetary policy committee. introduction it is an honour to be invited here this evening to help you and the business school celebrate its 21st anniversary. birthdays are a natural time to pause and reflect – especially those that mark a coming of age. reflecting on your first 21 years, much has changed since the business school was founded. some of you may remember that 1989 was the year in which nigel lawson resigned as chancellor and the berlin wall fell. you may remember less well that it was also the year that kylie and jason enjoyed four number 1 hits and coronation street attracted its largest ever audience to watch alan bradley meet his grisly end under a blackpool tram. how time flies. the economy has also had its fair share of ups and downs since then. after the 1990s recession, we enjoyed 63 quarters of consecutive growth, withstanding en route the effects of black wednesday and the dotcom bubble. inflation targeting was introduced, the monetary policy committee created and we benefitted from a sustained period of low and stable inflation. but as you know, this period of great stability came to an abrupt end with the largest financial crisis for at least a generation. output fell like a stone and inflation was buffeted by a series of price level shocks. i want to continue this theme of reflection in my comments tonight. however, with 2010 drawing to a close, i will restrict my observations to events over the past year – and what they may herald for the future – rather than your entire 21 years. a progress report for 2010. this has certainly been a busy year. the uk economy continued along the road to recovery. a new coalition government was formed and set in train what is planned to be the largest fiscal consolidation of the post - war period. the government also announced a major reform of the structure of financial regulation, assigning considerable new responsibilities to the bank of england. these events have taken place against a backdrop of strong global recovery, but one in which some countries, most notably within the euro area, continue to face acute fiscal and banking pressures, and large imbalances between surplus