17  All speeches are available online at www.bankofengland.co.uk/news/speeches  17  Chart 11: Pay growth strengthened as slack absorbed Four-quarter wage growth (per cent) 4.0 UK  3.5  Darkest values are 2019  3.0 2.5  US  2.0  Euro area  1.5 1.0 0.5  Lightest values are 2013  0.0 3.0  4.0  5.0  6.0  7.0 8.0 9.0 Unemployment rate (per cent)  10.0  11.0  12.0  Sources: ONS, Eurostat, Bureau of Labor Statistics, and Bank Calculations Notes: The UK wage measure is Average Weekly Earnings (AWE) regular pay, the US wage measure is Employment Cost Index (ECI) wages & salaries, and the EA wage measure is compensation per employee. Data frequency is quarterly. **************************** Over the past year, the broad economic trends in the period following the EU referendum have deteriorated (Charts 12a and 12b). The global economy moved from a broad-based expansion to a widespread slowdown. Uncertainties and growing concerns over the fracturing of the global trading system have been weighing on global activity, likely pushing down the global equilibrium interest rate, and exacerbating concerns about limited monetary policy space. The pace of growth in the UK has slowed below potential, owing to the weaker external backdrop and a persistent drag from entrenched Brexit uncertainties.
First, the efforts already made on the fiscal front by euro area countries are already bearing fruit: the primary position of the euro area should be close to balance by the end of 2012, which is a remarkable achievement compared to the other major economic areas (Japan, the United States and the United Kingdom will all run deficits of around 9%, 6% and 5% respectively). At the current juncture, this is clearly an asset for us and an element of confidence both for the markets and economic agents, and needs to be further enhanced. In addition to these efforts at the national level, a stronger framework for common discipline has been put in place, which represents a major step forward towards a more integrated economic union. The legislative package (known as the “six-pack”) which came into force last December considerably reinforces the Stability and Growth Pact: the surveillance powers of the European Commission regarding national budgets have been enhanced, sanctions have become quasi-automatic and the public debt and public spending criteria are being more closely monitored. In addition, the Treaty on Stability, Coordination and Governance puts in place a new “fiscal compact”, notably including the requirement that the annual structural government deficit does not exceed 0.5% of GDP. 2  BIS central bankers’ speeches  At current debt levels, economic agents would respond to loose fiscal policy by delaying their own private spending. The financial markets would continue to impose very punitive interest rates on our countries to compensate for the uncertainty surrounding the fiscal outlook.