in the uncertainty business is facing and how they are reacting to it. this will add to the information we already collect from surveys, official sources and the bank ’ s agency network all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx chart 5 : uncertainty indicator well correlated chart 6 : better correlated with investment than with gdp growth consumption source : ons and bank of england calculations source : ons and bank of england calculations chart 7 : rising uncertainty tends to shift new hiring the first two speak for themselves : aggregate towards temporary jobs gdp growth is strongly correlated with uncertainty ; on the demand side, the share of business investment is more sensitive than that of consumer spending. the fourth is interesting. although employment decisions are more easily reversed than most capital spending, permanent appointments do involve at least some degree of commitment and therefore might be susceptible to changes in uncertainty. the data seem to bear this out. chart 7 plots the change in the uncertainty measure against the ratio of temporary to permanent job hires ( as measured by the rec job market survey ). the correlation is clear, including in the source : rec survey, ons and bank of england calculations most recent data. charts 5 - 7 display the bare correlations with uncertainty and don ’ t necessarily tell you about causation – it ’ s quite possible that weaker growth increases uncertainty about the future. but even after you attempt to control for this reverse effect, the impact of exogenous changes in uncertainty still appear very significant. see haddow et al. ( 2013 ) and also bloom all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx specific effects of uncertainty about the impact of eu exit let me make a few additional points that may be particularly relevant in the current context : first, this uncertainty effect applies to all sunk - cost decisions about the future – in particular, it would make firms more hesitant about scrapping capacity, not just adding to it. that ’ s not to say that such decisions are never taken. if a firm gets genuine news that makes a particular activity unprofitable, it may well come to the point where it has to withdraw, writing off the capacity involved. but uncertainty per se raises the bar for all such decisions, disinvestment and new investment alike. so a lack of clarity about the uk ’ s future trading relationships needn ’ t result

notably by g20 members, have been able to bolster confidence and improve financial market sentiment. conditions in the banking sector, and in financial markets more generally, have significantly improved since the summer of last year. this is manifested by rising global equity prices and a decline in financial market volatility and global risk aversion. global capital flows have picked up again. spreads on sovereign and corporate bonds are narrowing. but we have to remain prudent. we should continue to press ahead with reforms to avoid abrupt changes in financial market sentiment. and we can only acknowledge that for some of the g20 members this improvement in financial markets has not yet found its way through to bis central bankers ’ speeches the real economy. the key responsibility for us, economic policy makers in the g20, is therefore to continue our action based on the three pillars : commitment to the policy goals that we have set out consistency in their implementation, across time, across countries and across policy domains and collaboration among all of our constituencies. i have no doubt that the g20 will, under the russian presidency, contribute to restoring growth and job creation for the global economy. thank you. bis central bankers ’ speeches