The fall in real incomes caused by the depreciation of sterling was absorbed by employees, effectively purchasing faster job creation. 13 In addition, large inflows of foreign capital – now financing a current account deficit of 6% of GDP – mean spending and investment are higher than would otherwise be possible. This underscores the value of the UK maintaining its attractiveness as an investment destination through a competitive tax system, deep human capital, a flexible economy and ready access to a wide range of markets. Finally, the UK has a highly credible monetary policy framework. The UK’s inflation target of 2% is symmetric: we care about inflation below the target as much as above. 9  With other reforms to further the fairness and effectiveness of market-based finance, and major steps taken towards end Too-Big-To-Fail, the UK is also on track to ensure greater risk-sharing between its creditors and debtors. 10  It is estimated that on average around a fifth of variation in regional personal income relative to the national average is stabilised by central government transfers. Estimates reported in Melitz and Zumer (2002), “Regional Redistribution and Stabilization by the Center in Canada, France, the UK and the US: A Reassessment and New Tests”. Journal of Public Economic, 86, pp. 263–286. 11  The geographical share of North Sea oil revenues, estimated by the Scottish Government, was 84.2% in 2012–3, down from 92.9% in 2008–9. In 2012–3, Scotland’s per capita share of North Sea oil revenues was estimated by the Scottish Government to be 8.2%.
For me today, it means that all current EU member states will contribute as much as they can to these improvements with their own ideas, knowledge and experience. The new ESCB members are prepared to contribute their share. They have gained a wealth of experience from a decade of economic transformation, a decade during which they used a wide variety of monetary policy strategies, from inflation targeting to currency boards, in order to deliver low inflation. Let me mention just a couple of lessons that were learnt: •  how to make decisions and produce good-quality economic forecasts when faced with large uncertainty (eg. about available data)  •  how to bring the economy back to low inflation after a series of supply-side shocks and how efficient communication is crucial in such circumstances  •  and that maintaining low inflation is much easier providing fiscal discipline and policy co-ordination can contribute to the task. These issues will surely be familiar to others. The knowledge gained during the transformation period will enrich the policy debates of the ESCB´s councils and working groups. This is how monetary integration will happen on a day-to-day basis both in countries that already use the euro and in those that will introduce it in the future. 2  BIS Review 70/2004