In fact, GDP had passed its pre-crisis peak in only two regions of the UK – London and the South-East. No other region in the UK had in fact experienced a “recovery”, whether Nottinghamshire or anywhere else. My “recovery” narrative, while true at the national level, had rightly fallen on sceptical ears at a regional level. Although the Bank’s policies only operate at a national level, this is important context for how we and others communicate about the economy. A second example came when I visited South Wales towards the end of last year. At the time, inflation was picking up as a result of the fall in the pound after the referendum, taking it above its 2% target. But this was a modest inflation overshoot by historical standards, with commensurately modest costs. Or so I thought. But when people in South Wales described for me its everyday consequences, the costs seemed anything but modest. Their personal inflation rates were running at closer to 10%. For some, that made for a stark choice between “heating or eating”. This made very concrete for me the benefits of the inflation target and monetary policy in supporting people’s everyday lives. A third example would be the narratives – that word again – I have knitted together from my various regional visits on the structural impediments to growth in communities, towns and cities across the UK. My deep hanging out has, to date, unearthed, six such impediments – the “big six”.
16  The curve has flattened  A lowering of the curve does not change the sensitivity of pay growth to unemployment, and changes in unemployment, will put pressure on pay growth in the same way. It will all just happen at a lower level. A flattening of the curve, however, reduces the sensitivity of pay growth to unemployment at all levels and to all rates of change of unemployment. This appears to have happened in some estimations of the post crisis estimations of the curve. 15  17  See Broadbent (2014)  16  This could result in a ‘double whammy’: pay growth would be accelerated higher demand for labour while at the same time the inflation adjusted curve would shift up, accelerating pay growth further. This can be seen in Chart 8: a fall in unemployment would result in moving from point A to point B (at higher inflation expectations) or point C to point D (at lower expectations). If those inflation expectations were to change at the same time that unemployment falls, the move would be from C to point B. See also Mishkin (2007). 17  See for example BIS (2017) and IMF (2013). Blanchard et. al. (2015) argue that since 1990 there is no statistically significant slope to a price Phillips curve in many countries, including the UK.