trade contracts and insure each other against risks they are unwilling to bear. even a moment of introspection reveals the absurdity of these assumptions as a description of the actual world. more often than not, even describing the universe of possible outcomes is beyond the means of mere mortals, let alone ascribing subjective probabilities to those outcomes. knight, f ( 1921 ), risk, uncertainty and profit, signalman publishing. fa hayek nobel prize speech 1974 “ the pretence of knowledge ”. in keynes ( 1936 ), chapter 12, he wrote : “ even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic. most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits – of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. ” keynes, j m ( 1936 ), the general theory of interest, employment and money, palgrave macmillan. carney ( 2014 ), inclusive capitalism : creating a sense of the systemic. they have also, over the centuries, been beset by poor behaviour, as shown by the fmsb ’ s comprehensive review of misconduct over the past two centuries. the history of financial fraud has rhymed all too frequently. see fmsb annual report ( 2017 ). all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx repeated episodes of misconduct – such as the libor and fx scandals – called into question the social licence that markets need to innovate and grow. 18 rather than being professional and open, markets became informal and clubby. rather than competing on merit, participants colluded online. rather than everyone taking responsibility for their actions, few were held to account. the crisis reminded us that real markets don ’ t just happen ; they depend on the quality of market infrastructure for their effectiveness, resilience and fairness. robust market infrastructure is a public good in constant danger of under - provision, not least because the best markets innovate continually. this risk can only be overcome if all market actors, public and private, recognise their

gdp, of the order of 1. 6 % and 3. 4 % respectively. these figures could be higher by about 2 percentage points if a trade deal is agreed between the eu and the uk before the end of the transition period. we see unemployment increasing to 8 % in 2021 before declining slightly to 7. 5 % in 2022. the latest restrictions announced by the government on monday evening clearly have negative implications for individuals, households and businesses across the country and for their incomes, their consumption patterns and their investment plans. ultimately, solving the economic crisis will be dependent on our ability to manage the health crisis as a healthy economy needs a healthy workforce, healthy consumers and a healthy community. from what we know so far, under the latest level 5 measures more sectors will remain open as compared to the april / may period since when consumers and businesses have adapted to operating with restrictions. the decline in domestic demand that we forecast for 2020 is likely to be larger than what we published in our quarterly bulletin two weeks ago but, on the assumption that the latest 1 / 3 bis central bankers'speeches measures will be time - limited and that consumers and businesses continue to adapt, our forecast is for activity to also continue to recover gradually during next year, although domesticfocussed economic activity remains unlikely to return to its pre - pandemic levels before 2022. payment breaks the economic shock has left many business and personal borrowers facing difficulties in meeting their repayment obligations. we recognise that that this is a worrying time as we move to level 5 and it is important to explain what is being done to support borrowers affected by the pandemic. at the onset of the crisis, lenders across europe offered loan repayment breaks to all borrowers whose incomes had been affected by the pandemic. this system - wide response, undertaken without individual credit assessments, provided relief regardless of whether the income shock was short - term or potentially more permanent. by early october, there were just under 54, 000 active payment breaks associated with irish household and business borrowers. 40 % of active payment breaks for irish borrowers relate to mortgages, representing 3. 4 % ( or 21, 322 ) of outstanding irish mortgages. active payment breaks for irish borrowers have reduced by 65 % since the end of june ( or a reduction of over 98, 000 ), as borrowers start to return to repayment arrangements. unfortunately, there will be borrowers who cannot return to full repayments and they will require