mervyn king : how international cooperation can raise britain ’ s economic performance opening remarks by mr mervyn king, governor of the bank of england, at the panel on eu / us cooperation at the advancing enterprise conference, london, 26 january 2004. * * * chancellor, ladies and gentlemen, in this session we shall examine how international cooperation can raise britain ’ s economic performance. before introducing our speakers this afternoon, i would like to present a few facts about productivity in this country, and then pose three questions. you might ask why a central bank governor is chairing a panel on enterprise. well, some believe in prudence for a purpose ; we believe in stability as a spring - board, a springboard for enterprise. since the start of the railway age in the 1830s, output per person has increased ten - fold in britain ; it has increased twenty - fold in the united states. that is because over that period output per person rose on average by 1 ½ % a year in the uk and by 2 % in the us. the result is that the level of output per person is now around 25 % lower in britain than the us. in part this reflects shorter working hours, but it also reflects a lower level of productivity. from around 1980, however, the productivity gap between britain and united states started to close, and for the following 15 years or so labour productivity actually rose significantly faster in the uk than the us, at an annual rate of 2. 1 % compared with 1. 4 %. but since 1995, the gap has started to widen again as ict investment has boosted productivity growth in the united states. the empirical evidence suggests that one of the most successful ways to speed up convergence in productivity is to promote international trade and investment, and openness more generally. within manufacturing, the rate at which the productivity gap between britain and the us closed during the 1980s and early 1990s was greater in the more open than the less open sectors. against that background, let me suggest three areas for questions : first, why is the gap in the level of productivity between the us and the uk so persistent? and what are the obstacles that prevent the gap from narrowing - are they in the fields of trade, technology transfer, or flows of investment? what are the respective roles of business and government in removing them? second, can the uk benefit as much as the us from the it revolution? is it a question of the speed with which business adapts? or is it the need to fund our

led task force at cop21. chaired by michael bloomberg, it is in the process of developing consistent, comparable, reliable and clear disclosures around climate - related financial risks. the task force has just published its phase 1 report for public consultation in advance of its final recommendations to g20 leaders over the next year. 11 improved private disclosure will also support public climate action. better information will allow policymakers to assess companies ’ speed of adjustment relative to countries ’ nationally determined contributions ( ndcs ). it will support more informed policies, including early responses if there are clear shortfalls. virtuous circles could be more quickly established. if governments build credibility by implementing their ndcs, this will raise the probability of further action to achieve 2 degrees. markets can then do what they do best and pull forward that adjustment. early awareness of the risks and opportunities associated with a low - carbon economy will attract mainstream institutional capital. that impact will be maximised if there are the right vehicles. in this regard, green bonds have the potential to align the interests of issuers and investors. to investors, green bonds offer a stable, rated and liquid investment with long duration. to issuers, they could tap the us $ 100 trillion global institutional fixed income investor base. moreover, the shift to the capital markets from banks will free up limited bank balance sheet capacity for early - stage project financing and other important infrastructure lending. at present, with less than one percent of outstanding bonds globally being “ green ”, the g20 is considering initiatives to catalyse this market, including : • developing a “ term sheet ” of internationally recognised standardised terms and conditions to make issuance more efficient ; • creating voluntary certification and validation frameworks to give certainty to issuers and investors that a project is “ green ” ; • integrating environmental risk and green certification into credit ratings ; • developing green bond indices to unlock the potential power of passively managed investments ; • standardising and harmonising principles for green bond listings to promote resilient and efficient trading and adequate liquidity ; and the ipcc estimates that additional investment of us $ 190 – 900bn is required annually in the energy sector alone if the rise in average global temperature is to be capped at 2c. www. ipcc. ch / report / ar5 / mercer estimates that additional cumulative investment in efficiency improvements, renewable energy, biofuels and nuclear, and carbon capture and storage could be in the range of us $ 3 - 5 trillion by 203