In the 1960s he became the first player to earn £ per week (roughly £ in today’s terms) in the British game which was then about four times the average male wage. Top Premiership players now earn more than 200 times the average wage. What has changed is the fact that pay is now being set in a world market. We have in the Premiership as in the City some of the best paid people in an international industry which is developing rapidly. We have imported the top of the world earnings scale and at a time when the stretch at the top world wide is increasing very fast. Just as in the Premiership, the stars of the City – the people who have not just the talent but the recent experience and networks to perform at the top level today – can command a high proportion of the returns from being at the hub of the industry. The growth of hedge funds and private equity can be seen in part as a move by the small group who have sufficient expertise in new instruments and markets to take more of the returns on ownership. 5 To sum up so far, internationalisation and technology favour the clustering of financial markets in London so we should expect London to continue to prosper relative to the financial industry worldwide and to the rest of the UK economy.
The risks we face are: first that we may increase interest rates too fast or push them up too far, with an unnecessary loss of growth, and second that we may raise rates too slowly with a cost in higher inflation and potentially higher interest rates and a sharper slowdown in the end. I voted for a further increase earlier this month partly because I was not convinced that current rates would be sufficient to bring credit growth and nominal demand back to their long term sustainable path. I also felt that the impact of moving too slowly on the credibility of the regime and thus the future prospects for the economy was of greater concern, given the robust rate of growth, than an unnecessary slowdown in activity. In reviewing the position again in future months I will be watching the trends in the growth of credit and money carefully. BIS Review 73/2007  7  8  BIS Review 73/2007  BIS Review 73/2007  9  10  BIS Review 73/2007  BIS Review 73/2007  11