ready for libor transition. one of our key messages to firms has been to stop writing new libor - related business that fixes or matures past 2021. the main area in which the bank undertakes such activity is in the swap programme used to hedge the government ’ s foreign exchange reserves, which we manage as agent for hm treasury. last year, we set up a separate project team to advise the treasury on its options – scaling the issue, assessing the available trading methods and liquidity in alternative markets, and evaluating the implications for risk and return. in light of that advice, the treasury decided some months ago to instruct the bank to cease writing new libor business with fixings falling after 2021, and transact only in sonia - linked contracts. our experience of sonia market liquidity so far has been positive : at least as good, if not rather better, than expected. another way in which libor potentially touches the bank ’ s operations lies in the collateral that we accept in our sterling liquidity facilities. roughly a tenth of banks ’ current drawing capacity 10 is collateralised by assets referencing sterling libor. those assets include : securities paying a libor - linked coupon, securitisations with embedded libor - linked swaps ; and libor - linked loans, in either raw or securitised form. the bank must be able to value and risk manage any collateral taken in its operations in case it has to take that collateral on to its own balance sheet in a default. as 2021 approaches, that will be increasingly difficult to do for some classes of collateral referencing libor. in many cases, firms may choose to re - reference libor - linked collateral to sonia, either by amending its terms or by issuing new instruments. we can already accept sonia - linked collateral, subject to meeting appropriate eligibility requirements. an alternative would be to ensure libor - linked collateral includes adequate fallback language specifying an alternative rate in the event that libor ceases to exist. the main https : / / www. bankofengland. co. uk / - / media / boe / files / sterling - monetary - framework / annual - report - 201819. pdf? la = en & hash = e4b7fdb6e9048dbd71f5c8ce4e00d3be9f6a96a2 all speeches are available online at www. bankofengland. co. uk /

of the recession and very high inflation the uk economy is having to contend with. the ratcheting up in gas future curves has been a feature for most of this year ( chart 2 ). at the time of the august 2022 mpr the futures curve peaked at 450 pence per therm which would have implied average household energy bills of £3500 from october 2022, nearly three times higher than a year earlier. although the futures curve has fallen back since and remains on a declining trend into the medium term, persistence has become more evident. sources : bloomberg finance l. p. and bank calculations. notes : spot price is the one - day forward price of uk natural gas. latest futures curve as of cob 21 november 2022. bank of england in the november 2022 mpr the mpc moved to adopting the full futures curve for its conditioning assumption for the forecast of energy prices. in november 2021, energy prices directly accounted for only 0. 8 % of the inflation forecast for 2022q4 compared to a direct impact of 3. 8 % in the latest forecast ( chart 3 ). sources : bloomberg finance l. p., department of business, energy and industrial strategy, ons and bank calculations. notes : pink diamond represents october 2021 inflation outturn. energy prices are also the biggest driver of the sharp decline in cpi inflation forecast from the middle of next year, contributing 2. 7 percentage points of the forecast fall of 5. 7 percentage points in cpi inflation to 5. 2 % in 2023q4. volatility of gas prices has also been a key feature. greater security of european supply through this winter has helped ease pressures but there remains significant concerns about next winter, and in november the mpc flagged that a persistently higher path for energy prices remains a possible alternative scenario. and given the uncertainties and balance of upside risks, we incorporated an historically large upside skew on our inflation forecast. sustained labour market tightness back at the time of the november 2021 mpr, most mpc members were concerned that the end of the furlough scheme could be material for near - term developments in the labour market, as some of the estimated 1 million workers still on furlough when the scheme ended in september 2021 moved into unemployment. the november mpr forecast was for unemployment to rise to 4. 5 % in 2021q4. as the economy recovered, employment remained resilient and unemployment fell to 4. 1 % after the end