cannot adjust effectively. that is one element of uncertainty in climate change within the gift of governments to solve, and many are working hard to do so. i will be speaking later this week at the green swan conference where i will set out in more detail the work the bank has done on climate change and where we go from here. as we look ahead to a decade that climate science tells us must deliver real climate action, i can promise you this, the bank of england will continue to play its part. i am grateful to zane jamal, ryan barrett, sarah breeden, theresa lober, matthew trott, and karen jude for their assistance in helping me prepare these remarks. 1 the share of manufacturing output in gdp has fallen from around 17 % in 1990 to around 9 % more recently, while the share of services has increased from around 70 % to around 81 % over the same period. further details here : gdp output approach – low - level aggregatesopens in a new window 2 see payment volume trends by type in uk payments market report 2020opens in a new window, uk finance 3 fsb global monitoring report on non - bank financial intermediation 2020opens in a new window 4 climate change act 2008 ( order 2019 ) 5 see chapter 6 of the sixth carbon budget : the uk ’ s path to net - zeroopens in a new window, the committee on climate change 6 as an example of damage exacerbated by climate change – a recent study from strauss, b. h., orton, p. m., bittermann, k. et al. ( 2021 ) estimates that $ 8. 1bn of the $ 62. 7bn of economic damage caused by hurricane sandy ( new york, 2012 ) was attributable to climate change driven rises in sea - levels 7 see chapter 6 of imf global financial stability report 2020opens in a new window 8 the stern review on the economics of climate changeopens in a new window 4 / 5 bis central bankers'speeches 9 see government announcement of climate considerations being embedded across uk principal financial regulatorsopens in a new window 10 dietrich, muller, and schoenle ( 2021 ) – ‘ the expectations channel of climate change : implications for monetary policy ’ 11 monetary policy in the intangible economy - speech by jonathan haskel, university of nottingham, february 12 see ‘ it ’ s not easy being green – but that shouldn ’ t stop us : how central banks can use their monetary

never be. but our work to improve climate disclosures, scenario analysis, and risk management, could help unlock such assessments. macroeconomy beyond the financial system, achieving economy - wide net - zero emissions will require greening the way we heat our buildings, manufacture industrial goods like steel and cement, generate electricity and produce food. this could prove to be an opportunity for the economy to regenerate ageing capital and raise productivity. analysis done by the network for greening the financial system ( ngfs ) and national institute for economic and social research by 2050 suggests that such an orderly transition could lead to some increase in global gdp, and lower unemployment relative to prior trends. these positive effects should be larger in countries like the uk that are net importers of energy. however, as i mentioned earlier, much of that rests on how the transition proceeds. the lesson from previous episodes of structural change is that they never involve a frictionless re - allocation of capital. and a disorderly transition, where more severe policies are introduced later in the horizon to compensate, could result in both lower growth and higher inflation from rising energy and materials costs in the economy. in either case, the economic impacts from such transition scenarios over the medium term will likely be much lower than the growing challenges from physical risks. under current climate policies, which are insufficient to reach net - zero emissions, analysis from the ngfs scenarios suggest that up to 13 % of global gdp would be at risk by 2050, even before accounting for the potential consequences of severe weather events. monetary policy these risks to the economic outlook make climate change and the transition to a net - zero economy also relevant factors for the conduct of monetary policy. the typical policy horizon for monetary policy is two to three years, and so many of the effects of climate change ( particularly tipping points ) will manifest beyond that timeframe. but the effects of climate change matter for monetary policy because structural shifts in the supply side of the economy can affect not only future point - in - time macroeconomic variables, but also the expected natural rate of interest ( r * ) and the natural rate of unemployment ( u * ). the physical and transition risks from climate change are relevant to these issues, although the economic modelling and research to estimate the relative size of these effects has only started to emerge in recent years. to take one example of the complexities involved in making such an assessment, the natural rate of interest might face both downward pressure from expectations of severe weather events