Sterling markets, where my main responsibilities lie, start in a reasonable place:  -  Many sterling swaps – the primary hedging instrument – have referenced SONIA rather than LIBOR for some time. That transition was given a further kick by the adoption of a ‘SONIA first’ trading convention in interdealer markets in October.6  -  In sterling loan markets, all customers discussing new or refinanced lending with their banks should have been offered a non-LIBOR alternative since the end of September. And new loans for anyone still unable to avoid using LIBOR in the near-term should include a clear mechanism to ensure those loans are converted to an alternative ahead of end-2021. But there’s further to go. In sterling swaps, we’ll need to see another jump if the market is to hit its target of ceasing all new LIBOR use7 by the end of March next year. All new lending linked to sterling LIBOR is also due to be phased out on the same timeline, with the exception of very short loans maturing before end-2021.8 Those are challenging goals – particularly for firms that are still not ready to move away from LIBOR, who have some rapid catching up to do. We recognise this comes at a time of difficult operating conditions more generally. But with LIBOR’s retirement now in the diary, sending new business its way isn’t just optimistic – it’s imprudent too. Though the precise timelines differ slightly in other currencies, the bottom line there is also clear.
China, India and other emerging economies will continue to grow strongly and to account for an increasing share of the world economy. The international competition in the product and labour markets and the international financial integration process will thus continue to increase during the foreseeable future. The deregulation of several markets during the 1990s has probably largely already made its impact on productivity. I interpret the SNS report published at the beginning of the year to say that the most likely development is that this factor will contribute less to the rate of increase in productivity during coming years. 7 At the same time, there is still relatively large scope for continued reforms in this field. A survey indicates that around 32 per cent of consumption was exposed to competition at the turn of the millennium. This figure for Sweden can be compared with the figure for the EU of around 45 per cent. 8 A similar picture is shown in a report by the Swedish Competition Authority. 9 This states that around half of the higher prices compared with the OECD arise from a lack of competition in Sweden. IT will probably fuel productivity for a long time. It takes time for companies to adjust to the new circumstances. This can be illustrated by means of a historical comparison. IT is just like electricity a technique for general use. The advent of electricity had no noticeable effect on productivity until companies literally rebuilt their factories.