mark carney : introduction to the open forum introduction by mr mark carney, governor of the bank of england and chairman of the financial stability board, to the bank of england open forum, london, 11 november 2015. * * * thank you, lord mayor for your extraordinary service this past year and for your gracious hospitality today. welcome, everyone, to the open forum. in a building that started its life in 1411 as “ a little cottage ”. 1 and which has become the place to bring people together : livery companies and businesses, traders and market makers, world leaders and citizens. today, we draw inspiration from this great tradition by gathering representatives from across civil society to discuss how to build the real markets of tomorrow. the bank of england has a statutory responsibility to protect and enhance the stability of the financial system in the uk. therefore, even if we don ’ t regulate markets per se, we have a close interest in working with others to create real markets that enjoy the trust of society whilst effectively allocating capital and risk. markets can be powerful drivers of prosperity and security for all. financial markets matter. by financing firms to hire, invest and expand, markets drive growth. by opening up cross border trade and investment they create new opportunities for businesses and savers. by transferring risks to those most willing and able to bear them markets help households and investors insure against the unexpected. indeed markets are becoming ever more important as individuals bear increasing responsibility for financing their retirements and insuring risks. it is vital markets work well - and are seen to do so. only real markets can deliver. real markets are resilient. they don ’ t collapse when the going gets tough. real markets are fair. participants compete on merit rather than collude online. real markets aren ’ t ends in themselves but means to much greater ends. only markets that transparently serve the real economy can retain the trust of society to operate ; in other words, only real markets have social licence. the crisis and its aftermath laid bare that many of our markets didn ’ t live up to these standards. at times, some of the most important fixed income, currencies and commodities ( ficc ) markets proved fragile, unfair, ineffective and unaccountable. the twin crises of the solvency and legitimacy of finance undermined trust in market mechanisms and the effectiveness of the financial system. old and new london by walter thornbury ('guildhall ', old and new london : volume 1

example, the latest cbi survey shows 62 % of manufacturers reporting some spare capacity – which is virtually in line with the average for the decade before the financial crisis. 6 the evidence on wages and prices is also consistent with the view that spare capacity is not exerting as much downward pressure on inflation as the mpc expected last summer. in the manufacturing sector, underlying wage growth is back up to the 4 – 5 % level already, though is more subdued in the services sector. and after quite widespread pay freezes last year, the latest pay settlements data from income data services show that the most popular range for pay settlements is currently 2 – 3 %, which is where four out of ten pay settlements are now being struck. if the recovery continues and headline inflation remains relatively high, there may be a further upward drift in pay growth in the private sector, offsetting some of the downward pressure on wage growth from the public sector. uk inflation performance that brings me to the final area where the uk economy has performed very differently to expectations last summer – headline inflation. the uk has just experienced the second significant upward spike in inflation in the last couple of years. since the beginning of 2008, when the financial crisis and the ensuing recession might have been expected to push down inflation, consumer price inflation in the uk has averaged 3 % – above the 2 % target and more than one percentage point higher than average cpi inflation in the pre - recession period of growth. our inflation rate is clearly influenced by external factors in the world economy, such as a volatile oil price, and these have clearly made the control of inflation more difficult over the last two or three years. but if these global forces were solely to blame for higher inflation, they would be having a similar effect in other major economies. as chart 6 shows, the us and the euro area have seen lower and more stable inflation over the last couple of years, with inflation averaging around 1¾ % since the beginning of 2008. us inflation has recently been pushed up to over 2 % by higher petrol prices, but to a much lesser extent than in the uk. according to the labour force survey measure, unemployment peaked at 11. 9 % in mid - 1984 and 10. 6 % in early 1993. approximately two years after the start of the recession in both cases, unemployment was 10. 2 % at end - 1981 and 10. 4 % at end - 1992. in the april 2010 quarterly industrial trends survey, 62 % of manufacturers reported that they were working