adverse global implications. fourth, the generally benign behavior that international financial markets have displayed in recent months could swiftly be disrupted by a number of factors. the latter include a reassessment of the economic outlook by global investors as a result of policy surprises, economic difficulties in key emerging market economies and geopolitical conflicts, among others. finally, we should bear in mind that the medium - to long - term outlook for potential growth in both advanced and emerging economies may deteriorate due to persistently weak trends in productivity, demography and the available stock of capital. what should be done to allow emes to thrive in such a complex external environment? i wish to stress that the main responsibility lies in emes themselves. the consequent recommendations in terms of macroeconomic and financial stability and structural reform are well known. in this respect, i would only like to note that notwithstanding the important progress achieved during the last years, major efforts are still needed, as we continue to see high fiscal and current account imbalances, as well as excessive debt levels, in many of these economies. in addition, structural reform policies in emes stagnated or even reversed in recent years, with only a few of them announcing comprehensive reform plans. however, as important as these efforts may be, it is undeniable that the magnitude of the challenges faced calls for increased cooperation of the international community. it is in this area, and especially in the topic of international monetary cooperation, where i would like to focus my remarks. international policy cooperation faces many challenges. as history has shown, policy cooperation at the international level is particularly strong during episodes of crisis and severe economic and financial distress. indeed, outside such episodes, the case for cooperation tends to fade, as its benefits become less evident and policymaking therefore has even stronger incentives to favor national over multilateral considerations. moreover, the usefulness and feasibility of international policy cooperation is a subject of debate. at one level, some argue that under floating exchange rates countries are effectively isolated from external shocks and policy choices, and thus free to set a monetary policy stance appropriate for their own economies, rendering international cooperation unnecessary. 2 even for some of those who challenge the isolating properties of floating exchange rates, potential conflicts with the domestic mandates of central banks can make international monetary cooperation difficult to attain. 3 in my view, the merits of international cooperation outweigh by far its potential disadvantages. in fact, the global financial crisis provides unquestionable evidence

% per year over the past two decades. it has also experienced rising rates of labour market participation, in particular among older workers and women. the first, and possibly both, of those factors are now in reverse gear. the share of the total uk population of working age has been falling since 2008. globally, dependency ratios – the fraction of the population not in the workforce – is forecast to start rising from around now for the first time since the 1970s ( chart 15 ). this rise in dependency ratios is fastest in high - income countries, such as the uk. until recently, this effect had been more than offset by rises in the uk population. but that, too, is changing. recent estimates suggest the uk population may have shrunk by as much as 1. 3 million people over the past year. 18 if these demographic trends continue – a smaller population fewer of whom are in work – this would turn the demographic tailwinds of the past decade into a headwind looking ahead, constraining supply and potentially amplifying inflationary forces. friedman ( 1961 ). goodhart and pradhan ( 2020 ). see o ’ connor and portes ( 2021 ). the authors themselves describe this estimate as an upper bound. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice chart 15 : global dependency ratios world middle - income countries high - income countries low - income countries source : united nations, department of economic and social affairs, population division note : dependency ratio is population aged 0 - 19 or 65 + per 100 aged 20 - 64 a second supply - side effect working in the same direction is globalisation. the world witnessed many decades of under - interrupted growth in world trade and global value chains after the second world war, much of it associated with the rising role of china in the world economy. 19 on average since 1983, global trade volumes have risen by around 5½ % per year, roughly double the rate of growth of the world economy. the covid crisis has decisively broken those trends. global trade volumes collapsed by around 15 % at the peak of the covid crisis, compared to a fall in global activity of around 9 % ( chart 16 ). the crisis saw the fracturing of some global value chains, in part as a result of countries prioritising domestic over international supply of some goods and services. with global trade barriers tending to rise over recent years, and