The governor of the Bank of England, Mark Carney, threw down the gauntlet to financiers to have in mind the real wages of UK workers as they look to reform complex and sophisticated financial mechanisms. Speaking at the Mansion House on 20th June 2017 he also mentioned the need for a ‘new approach to trade policy’ in the run up to the start of Brexit negotiations.
Carney argued that sophisticated financial services, such as the central clearing of derivatives, are more closely related to the concerns of the wider UK population than they might at first appear. The radical reform of financial services over the past decade should not be an end in itself, he suggests, but rather a means to serve households and businesses better.
Carney said:
‘We must ensure that the real economy reaps its full benefits, including through freer trade in services and more resilient financing of the investment needed to boost wages of workers in all industries across the UK. Escaping the low inflation / low wage / low growth trap requires more than a textbook rebalancing of macro policies across the major regions. It demands comprehensive structural reforms and a new approach to trade policy. Such changes could more than make up for the dramatic fall in the real incomes that UK households have experienced in the decade since the crisis. The Brexit negotiations will be the test.’