But while spending on retail goods has been virtually flat since last autumn, total consumer spending, including services and utilities, has continued to grow, though quite slowly. And while the prospects for consumption are clearly important, so too are those for other key drivers of the economy, such as business investment and net exports. The question is: if consumers decide to save more, are the conditions in place for other sources of demand to take up the slack? The answer depends in part on what is happening in the rest of the world. Plainly, developments in the rest of the world will influence domestic monetary policy. The UK is a very open economy, exposed to trends and shocks that affect supply as well as demand, and our financial markets are fully integrated with global markets. Sterling is one of the world’s most liquid currencies, and the FTSE 100 is heavily weighted with multinational companies. Let me give one example of what this can mean in practice. Over recent years, the progressive shift toward sourcing from low cost producers has been depressing import prices, and improving the terms on which we trade. This has exposed domestic producers to intense competitive pressures, but it has been unambiguously good news for consumers. And it has probably meant that the MPC has been able to set somewhat lower interest rates to meet its inflation target. The establishment of global markets in key asset classes has created complex linkages between economies as well as facilitating better risk sharing.
This time I would like to delve into some matters of great relevance for our institution: (1) follow-up to the Independent Evaluation Panel’s recommendations that we shared with this House a year ago; (2) the impact on the Bank’s balance sheet of the of the unconventional measures implemented; and (3) the Bank’s progress from the technological point of view. III.1. Follow-up to the Independent Evaluation Panel’s recommendations In September 2018, the Bank’s Board agreed to commission an external, independent evaluation of the Bank’s performance of its main legal mandates over the past ten years. To this end, it convened five international experts in the fields of central banking, monetary policy, and financial stability. This Panel, chaired by former Central Bank of Israel Governor Karnit Flug 3, issued a report in September 2019, which, along with positively evaluating the Bank’s performance, made 40 recommendations for improvement. Of these, 24 referred to monetary policy, 14 to financial policy, and two to corporate matters 4. Of this set of recommendations, the Board dismissed two 5 and pledged to take action on the remaining ones. With a little less than a year to go, 23 of the 38 recommendations validated by the Board have been fully complied with, equivalent to 60% of the total; another 10 are close to completion, and five are still under study, four of which involve matters requiring legal reforms (Table 4).