currently indicate. we talk to people a third way of reducing the risk of error is to talk to people on the ground. if the hard data are at odds with what they are telling us, that will give us pause for thought - about the likely economic outlook, or at least the risks around our central view. back in the early 90s a familiar charge against the treasury ( which at that time had primary responsibility for setting interest rates ) was that they were out of touch - stuck in london, they missed early signs of the recession. the bank has been careful to avoid this trap. it has built up a network of agencies to act as its eyes and ears around the country. that regional network has grown out of the bank ’ s branches that were established in 1826 to deal with problems caused by the failure of local banknote - issuing banks. ( the nearest branch to north wales would have been in liverpool, and like several of the sixteen branches which the bank opened at that time it was located on land previously occupied by licensed premises - the old queen ’ s arms in castle street. indeed the guiding principle seems to have been “ if it works as a pub it will work as a bank ”. the licensed victuallers association has taken its revenge in recent decades, as old banks have been turned into pubs ). within the branches, the bank appointed an agent to liaise with local industry and commerce, and since 1930 they have been sending regular reports on their economies to threadneedle street. during the 1980s and 1990s, most of the branches were closed as different schemes for guaranteeing the supply of bank notes were established. but the agents remained, and the network was extended to its current line - up of twelve - including a new welsh agency located in cardiff, now run by adrian piper. between them, the agents are in regular contact with some 8000 firms. this provides the basis for the agents ’ monthly reports and presentations to the mpc ; the committee also commissions special surveys and asks for agents ’ help in understanding puzzles in the data. this information is currently published in summary form each quarter, alongside the inflation report. we are now looking at ways of making it available on a monthly basis, alongside the minutes of the mpc meeting. mpc members regularly take their own eyes and ears on visits to individual businesses, making around 60 visits to the regions a year. as well as acting as a reality check on economic statistics, talking to businesses around the country improves our understanding of

a strong positive relationship between savings rates and lifetime income. as documented in king and low ( 2014 ). see summers ( 2014 ) and wolf ( 2014 ). the hypothesis that weak post - crisis growth represents a debt super - cycle which will ultimately come to an end is set out in rogoff ( 2015 ). imf ( 2009 ). bis central bankers ’ speeches but they do attach significantly more weight to the downside risks than they did prior to the crisis. 11 this would reduce long yields in two ways : by making firms less confident about the future payoff from their investment projects, thus requiring a lower level of interest rates to incentivise them to invest ; and by making savers demand a higher credit premium to lend to the private sector, thus driving a wedge between risk free rates and other interest rates in the economy. 12 my own view is that most of the headwinds that have buffeted the global economy over the period since 2008 - 09 do bear the hallmarks of a balance sheet recession in which the impetus to reduce debt is the force driving agents behaviour : first by financial institutions who reduced the supply of credit to the real economy ; then by the businesses and households who simultaneously became more pessimistic about the outlook and reassessed their need to maintain their own stock of liquidity. when public sector balance sheets reached their limits, it was the turn of deleveraging at a national level through fiscal consolidation, a process which is likely to continue for some time to come in the uk and euro area. it would be overly pessimistic to have as one ’ s central case that the headwinds currently affecting the economy will persist for decades to come. although they will be persistent, they will not be permanent. indeed there are now nascent signs that some of these headwinds have already begun to ease. for example, against a backdrop of improved confidence in the recovery ( chart 5 ), firms have slowly but surely been increasing the amount they invest relative to the amount they save ( chart 6 ). and household saving has also declined from its very elevated precautionary levels. but that is not to say that it is imprudent of financial markets to attach weight to the downside risks – they are real. indeed, reducing the probability of those risks materialising has been a driving factor in the mpc ’ s decision to maintain bank rate at its historically low level of 0. 5 % for 6 years, and the