Britain’s regional economies: how different are they, and how should those differences affect monetary policy?

In this lecture, the Deputy Governor considers the degree to which the United Kingdom’s regional economies differ, in economic terms, both absolutely and by European standards; and also recent trends in their relative positions. He goes on to ask why regional trends should matter to monetary policy makers. He argues that an examination of the differences between regions can improve their understanding of the nature of the economic cycle, and of the likely effect of shocks on the national economy. Moreover, regional patterns of economic activity may be affected by monetary policy—and, in particular, the authorities need to take account of such patterns when assessing what degree of monetary tightness is appropriate in the pursuit of national price stability.

Britain’s regional economies: how different are they, and how should those differences affect monetary policy?