Then, just as these bottlenecks were easing as the pandemic receded, UK energy prices rose dramatically following the Russian invasion of Ukraine and the resulting dramatic increase in wholesale European natural gas prices. And now, just as those wholesale gas prices have fallen substantially in recent months, we are seeing another inflationary impulse coming from rises in food prices driven, at least in part, by unexpectedly weak crop yields in southern Europe and north Africa. [10] Understood in this way, the persistence of UK inflation is largely a manifestation of ‘bad luck’ – a ‘series of unfortunate events’. It reflects a sequence of fundamentally transitory shocks – each of which monetary policy can do little about, for reasons I have already explained – that have cumulated through time into a more long-lasting elevation of headline inflation. There is much truth in that narrative. But we have to guard against complacency in interpreting recent inflation developments in this way. I recognise that this is potentially both a self-serving and an incomplete view of recent inflation developments in the UK. For one thing, we need to assess whether the surprises we have been confronted with over recent years could have been anticipated by better analysis and research: for example, could we have forecast the vulnerabilities in global supply chains once the pandemic had struck? Or could we have foreseen the dynamics in food prices given agricultural commodity prices?
Likewise, the reforms of the regulation and supervision of the financial industry has taken us in the right direction, and much has been accomplished to make our banks safer. But still much needs to be done to feel the right degree of comfort. Some final words I would direct towards the threat of protectionism. An enormous risk for the global economy is the temptation to shed the commitment to multilateralism and embark on protectionism. Beggar thy neighbor policies are quite perilous, as history amply shows. It is true that trade needs to be both free and fair, that commitments made within the framework of the World Trade Organization and other fora need to be observed. Unless we defend open markets, we invite big commercial conflicts and a proliferation of lose-lose situations. Allow me to conclude my short address by pointing out that as a Romanian official I am confident that important steps have been already taken to ensure a more close cooperation in order to solve the afore mentioned issues. As you know, Romania holds at the moment the Presidency of the Council of European Union and good work has already been done by our team in Bucharest and Brussels. They held 15 working parties in the Council, negotiated in 18 trilogues with the European Parliament, attended over 30 technical meetings, among bilateral meetings, informal consultations with the Parliament and the Commission. They have concluded the work and agreed on two files (Risk Reduction measures – the Banking package and Pan-European Pension Product).