But, together with their counterparts in other jurisdictions, they have also spent these years designing and implementing reforms to prevent a recurrence of such an episode. Some of these have been to broaden and reinforce the underlying, the non-varying framework of regulation to make both financial firms and the financial system more resilient. Some of these reforms, however, have been to create the institutions, the macroprudential authorities such as the Financial Policy Committee (FPC) of the Bank of England, charged with assessing time-varying risk in the financial system and to give those institutions the tools to address such risks. Much of the FPC’s focus over the first four years of its existence has been reinforcing the underlying regulatory framework. While there remains much work to be done, the design of the main elements of the framework – addressing capital, liquidity, too big to fail – is essentially completed. We are now increasingly moving into the implementation stage. As the UK economy continues to expand, and as monetary policy normalises – which we expect to be limited and gradual – we will more and more need to think about the time-varying element of  BIS central bankers’ speeches  1  our mandate, how the associated credit cycle is developing and whether and how we apply our reforms to address this. Aggregate credit After a very deep recession and slow recovery, the UK economy regained its pre-crisis level of output in the middle of 2013 and has since been expanding steadily.
The TUC estimate that as many as 1 in 9 workers may be in work which is insecure in income terms.7 This income insecurity has been a key and recurrent theme in my recent discussions with charities, faith and community groups across the UK. For some, these income insecurities have been worsened by the introduction of Universal Credit. This has added time lags in payments to claimants, caused rising concerns about benefits sanctioning and has heightened uncertainties about eligibility for work criteria.8 Recent research by the Resolution Foundation has found that pay volatility in fact affects a significant number of UK workers, not just those on low pay or the gig economy.9 Over 90% of those who remained with the same employer during 2016-17 experienced at least one month when their take-home pay varied by more than 5%. This pay volatility is more prevalent for those on lower earnings and among the young. Income volatility appears to have significant welfare costs for workers. A recent study found the average worker would be willing to sacrifice a fifth of their wage to avoid a variable work schedule set by their employer.10 In practice, gig workers tend to be paid less not more. Pay of self-employed and zero-hours contract workers lies significantly below employed and permanent contract counterparts (Chart 12). This is a malign coincidence of lower and less certain income.