Labour market reforms enacted over the past twenty-five years have led to a more flexible workforce. Unemployment has fallen without generating unsustainable growth in wages, and hence inflation. And in recent years the role of migrant labour has been important in easing the bottlenecks and skill shortages in what was otherwise an undoubtedly tight labour market. Firms have been able to adjust and adapt to events more quickly and that has produced less volatility in output, employment and inflation for the economy as a whole. With economic growth expected to slow over the coming year pressures in the labour market are likely to ease, reducing the demand for migrant labour, and possibly beginning to reverse recent strong inflows. A second fundamental change has been to the monetary policy framework. The experience of those three recessions and bursts of inflation has led to a settled consensus that monetary policy should be directed at controlling inflation and that there is no long-run trade off between inflation and output growth. This consensus has been embedded by transferring interest rate decisions to an independent Bank of England, with a clearly defined inflation target of 2% measured by annual CPI inflation. That has helped build confidence that if inflation does move away from target, we on the Monetary Policy Committee will act to ensure that it returns to target in the medium term. That confidence should ensure that  2  It has only deviated by more than 1 percentage point from that average on 4 occasions.
Presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR) Press conference, Friday 28 May 2021  Speech by François Villeroy de Galhau, Governor of the Banque de France Chairman of the ACPR  Ladies and Gentlemen, It gives me great pleasure to be with you again for the presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority), in the company of the new Vice-Chairman, Jean-Paul Faugère, Dominique Laboureix, Secretary General of the ACPR, and Alain Ménéménis, President of the Sanctions Committee. I would first like to pay tribute to the staff at the ACPR – more than 1,050 men and women whose professionalism is exemplary and recognised – who have worked especially hard, both on-site and remotely, to monitor closely the effects of the economic crisis on financial stability. Exactly a year ago, when we were just at the start of the Covid crisis, I pointed out to you, in this exact same setting, how vigilant we were being and how confident I was, both in the competence of our supervisor and in the resilience of the financial system. Looking back, we haven’t done too badly at all: at this stage, the financial risks are, on the whole, under control, thanks to resilient financial institutions with solid fundamentals (I).