The rapid economic development of these economies as they have integrated into the global economic system has created a major engine of growth for the world economy. However, this period of intense globalisation has not been without its downsides. Over my time on the Monetary Policy Committee since October 2006, we have seen how a highly integrated economic and financial system can also generate instabilities and transmit economic shocks rapidly around the world. The debates and the decisions of the MPC while I have been a member of the Committee have been dominated by the impact on the UK of the turbulence created by a global financial crisis, a major world recession and the inflationary impact of movements in globally traded energy and commodity prices. There was very little inkling of the turmoil to come when I joined the Committee in October 2006. My time on the MPC started towards the end of its first decade, which was a period of relatively stable economic conditions – steady growth and low inflation, with unemployment around 5% of the labour force. For me, however, this honeymoon period did not last long. Less than a year after I joined the Committee, over the summer of 2007, we saw the first tremors of the financial crisis. And by the autumn of 2008 it was clear we were heading into a major world recession.
Looking back over the past twelve months, nearly 400,000 jobs have been created across the economy as a whole – which compares very favourably with the rate of job creation in the decade before the recession.1 Chart 1 UK employment in recessions and recoveries Numbers employed rebased to 100 at cycle peak 102 101 100 99 98 97 96 95  1977 Q4 - 1983 Q4 1988 Q2 - 1994 Q4 2006 Q2 - 2011 Q1 *  94 93 92  -8  -6  -4  -2  0  2  4  6  8  10  12  14  16  Number of quarters from cyclical peak  *: Numbers employed for Q1 2011 proxied by that between Dec 2010 and Feb 2011. Source: ONS Labour Force Survey  As Chart 1 shows, the performance of UK employment has been much stronger through the recent economic cycle than we saw in the early 1980s and early 1990s – reflecting the flexibility of the labour market, the resilience of businesses through the recession and the impact of the recovery in demand over the past eighteen months. According to the latest estimates, UK employment is about one per cent down on its peak level in early 2008, compared to a reduction of 5–6% at the equivalent stage of the previous two economic cycles.