Chart 2: Banking concentration Per cent 60 50 40 30 20 10 0 1996  2000  2004  2008  UK  Euro area  2012  2016  US  Sources: Bank of England, European Central Bank, Federal Reserve Bank of St. Louis and Bank calculations. Notes: Data refer to banking sector assets of the five largest institutions in each region as a share of total banking sector assets. UK banks are all UK resident monetary financial institutions (MFIs). These data cover only the UK assets of the MFIs. As such they differ from the institutions' own published accounts that will comprise the global assets of the group. Euro-area data prior to 2006 are constructed using data for the Netherlands, Germany, France, Italy, and Spain holding the share of these countries relative banking sector sizes constant, at their 2006 level. This is due to data availability limitations pre-2006. 25  All speeches are available online at www.bankofengland.co.uk/speeches  25  Chart 3: UK-listed firms’ average mark-ups Mark-up (e.g. 1.2 = 20%) Mean (weighted by total sales)  1.6 1.5 1.4 1.3 1.2 1.1 1.0  1987  1990  1993  1996  1999  2002  2005  2008  2011  2014  2017  Sources: Thomson Reuters Worldscope and Bank calculations. Note: Details of how mark-ups are estimated are described in the Appendix. Individual mark-ups are weighted by their share of total sales in the sample in a given year.
Chart 4: UK market concentration and mark-ups Sales-weighted markup (per cent)  6 5 4 3 2 1  y = 0.2132x + 1.4031 R² = 0.0014  0 0  0.1  0.2  0.3 0.4 0.5 Market concentration (HHI)  0.6  0.7  0.8  Sources: ONS, Thomson Reuters Worldscope and Bank calculations. Notes: Data show market concentration and the average firm-level mark-up at the 2-digit sectoral level. The market concentration metric shown here, the HHI, is normalised to be between zero and one. While the relationship shown here – at the sector level – is only weakly positive, the relationship between firm-level mark-ups and the HHI is statistically significant in a regression when firm and time fixed effects are included. Mark-ups also exhibit a positive relationship with other broad measures of profitability, such as the dividendsto-sales ratio and the market capitalisation-to-sales ratio. 26  All speeches are available online at www.bankofengland.co.uk/speeches  26  Chart 5: UK-listed firms’ sectoral mark-ups Mining and Quarrying Manufacturing Construction Wholesale and Retail Transport and Storage Accommodation ICT Professional, scientific and technical Administrative and support Other service activities  Cumulative change in the mark-up since 1987 (Δ0.5=50pp) 1.0 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4  Note: the Arts, entertainment and recreation sector is excluded. -0.6 1987  1990  1993  1996  1999  2002  2005  2008  2011  2014  2017  Sources: Thomson Reuters Worldscope and Bank calculations.