And all policymakers have an obligation to learn from past crises and past mistakes. That is the only way credibility can be built: not the avoidance of crises and mistakes, which is impossible, but the recognition by the public that, when they do happen, the crises are contained and the mistakes are honest ones. The Bank of England is embarking on the latest chapter in its 318-year history. We cannot avoid a crisis but, as with Barings in 1890, we can endeavour to prevent it becoming a drama. We will certainly be doing our best to prevent it becoming a tragedy like that of the past few years. If nothing else, this new chapter will have learnt from, and will build on, the lessons of history. Thank you. References Ahamed, L (2009) “Lords of Finance”, William Heinemann Ltd. Bagehot, W (1873), “Lombard Street: A description of the Money Market”, Reprinted 1962. Irwin, Homewood, Illinois. Bank of England Archive E4/2. File on employment of women 1910–1919. Bank of England, (2012), The Framework for the Bank of England’s operations in the Sterling Money Markets available at http://www.bankofengland.co.uk/markets/Documents/ money/publications/redbookjune2012.pdf  14  Capie (2010) p50. 15  Boyle op cit p327.
There may be some early indications that such a shift has begun to occur with prices rising faster outside metropolitan areas. As of March this year, annual house price growth has been in the 13-14% range for the North of England and the 10-12% range for the Midlands, Wales and Scotland, with London the laggard at just under 4%. But even if it has begun, is far too early to say whether or not it will be sustained. Preferences expressed during the pandemic and lockdown may not be a good guide to post-pandemic behaviour. If it occurred, such a shift would reverse decades of movement in the other direction and might see closing of the gap between London and other high cost areas. It is not clear what impact a more buoyant housing market along these lines would have on prices, mortgage indebtedness distribution of housing wealth. Even if prices rise in newly popular locations and the volume of mortgage transactions increased, there could be offsetting effects. First-time buyers of properties outside high cost metropolitan areas who would otherwise have bought in those areas would take on less debt than they would otherwise have done. And existing owner-occupiers who moved from such areas to other areas in the UK might in fact reduce their debt in doing so. Supply may also be more able to respond to demand outside city centres.