Unemployment appears to have peaked at just below 8% of the labour force whereas  1  2  Total employment grew by 1.4% in the year to Dec-Feb 2011, according to the latest Labour Force Survey, while private sector employment is estimated to have risen by 1.9% over the course of 2010. This compares with average employment growth of around 1% per annum between 1997 and 2007. BIS central bankers’ speeches  it rose to over 10% following the early 1980s and early 1990s recessions. And I am pleased to note that despite the recession, the number of people employed in the UK is now back above the level recorded when I joined the MPC in October 2006.2 For me, it is not the growth or employment performance of the UK which has been disappointing over the period of economic recovery, but the persistence of relatively high inflation. The primary responsibility of the Monetary Policy Committee within our current policy framework is to maintain price stability – defined in terms of a 2% target for CPI inflation. Yet the current level of inflation is 4% and the most likely scenario is that it will rise further as we move through this year. And this is not just a one-off episode. Over the 55 months I have spent so far as a member of the Monetary Policy Committee, inflation has been above target more than five times as often as it has been below – 46 months compared to 9 months.
Financial union is essential in a single currency area where cross-border capital flows can lead to credit booms and other imbalances – and where the negative effects of a bust can spread rapidly to other members. One essential part of financial union is a single banking supervisor. As you know, the European Commission has recently proposed that the new supervisor should be based at the ECB. This is important to ensure consistency across the euro area and to prevent regulatory capture. Day-to-day tasks, however, would remain with national supervisors who have the competence and resources to implement them. But financial union does not have to imply the pooling of deposit guarantee schemes, an issue that I know is of concern in this country. Organising and funding deposit guarantee schemes can remain a national responsibility, with comparable effectiveness. In the longer term, all four pillars are equally important. They are the bedrock for the enormous potential of the single currency for Europe’s citizens. Completing economic and monetary union would give citizens greater security against any future crisis. It would create the foundations for sustainable growth and employment. For all citizens of the euro area, it is therefore essential that Europe’s leaders stay on course. Thank you for your attention. BIS central bankers’ speeches  5