BIS central bankers’ speeches  1  Is France condemned to undergo a period of prolonged austerity? France must be extremely rigorous in the management of its public finances. A balanced budget must rapidly be restored, which presupposes in particular a structural reduction in government spending. Like many other countries, we have been living above our means for too many years. We need to stop accumulating debt. Growth will return if confidence does. And to reinstate confidence, we must guarantee that our public finances will be consolidated. 2  BIS central bankers’ speeches
From the repeal of the Corn Laws onwards, the UK has acknowledged that impediments to free trade are seldom, if ever, “first best” responses to the many maladies from which market economies can suffer.4 Where the UK has led, others eventually followed. In time, every major advanced economy has come to embrace openness as a strategy to promote the well-being of its citizens. Today, the UK’s trade totals around two-thirds of its GDP (Chart 1). Its external assets and liabilities exceed ten times GDP. And its share of global Foreign Direct Investment (FDI) is around two times its share of global activity, accounting for the largest share of FDI into the EU (Chart 2). Its openness extends beyond the real economy to the financial economy. The scale, complexity and degree of global activity of the UK financial system are unmatched in the European Union (Chart 3). More foreign banks operate in the UK than any other EU country, and more than half of the world’s largest financial firms have their European headquarters in the UK. The UK has the largest global share of cross-border bank lending, foreign exchange trading, and OTC interest rate derivatives. It has the world’s third largest insurance industry and its second largest asset management industry. The UK banking sector is four times GDP and non-bank financial institutions are a similar size (Chart 4), while financial services accounted for 8% of output and around 3½% of employment in 2012.