Jon Cunliffe: The Phillips curve - lower, flatter or in hiding?

Speech by Sir Jon Cunliffe, Deputy Governor for Financial Stability of the Bank of England, to the Oxford Economics Society, Oxford, 14 November 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

The unemployment rate in the UK today is 4.3%. The last time it was that low was 1975 - the year I graduated from university.

That year, average wages grew by 24%. 42 years later, with unemployment at the same level, whole economy average weekly earnings grew by 2.2% (Chart 1).

Equally strikingly, that 2.2% is about the same rate of wage growth as in 2011 when unemployment rose above 8% for the first time since the mid-1990s. Over the following 6 years unemployment has fallen quickly and continuously but nominal pay growth has largely remained bound between 1 and 3%.