British central bank governor calls for more inclusive growth globally

The governor of the UK central bank has called on fellow central bankers across the world to pursue policies to create more inclusive growth.

The deepening of the relationship between global markets and technological progress has lifted more than a billion people out of poverty, said Mark Carney, the governor of the Bank of England (BOE) since 2013, in his address to Liverpool audience on Monday.

The governor added that since 1960, real per capita GDP had risen by two and a half times, and that life expectancy had risen by on average two decades.

But he warned "despite such immense progress, many citizens in advanced economies are facing heightened uncertainty, lamenting a loss of control and losing trust in the system."

"To them, measures of aggregate progress bear little relation to their own experience. Rather than a new golden era, globalization is associated with low wages, insecure employment, stateless corporations and striking inequalities."

These anxieties have been compounded by the twin crises of solvency and integrity at the heart of finance, he added.

Speaking to the audience at Liverpool John Moores University, Carney warned that as a consequence of all of these developments, public support for open markets was under threat.

"Turning our backs on open markets would be a tragedy, but it is a possibility. It can only be averted by confronting the underlying reasons for this risk upfront," said Carney.

Carney, who was governor of the Bank of Canada before taking up the BOE post, outlined three ways of tackling the lack of confidence in open markets that people felt and their disengagement from the benefits of economic and technological change.

"First, economists must clearly acknowledge the challenges we face, including the realities of uneven gains from trade and technology," said Carney.

"Second, we must grow our economy by rebalancing the mix of monetary policy, fiscal policy and structural reforms."

"Third, we need to move toward more inclusive growth where everyone has a stake in globalization."

For the societies of free-trading, networked countries to prosper, they must first re-distribute some of the gains from trade and technology, and then re-skill and reconnect all of their citizens. By doing so, they can put individuals back in control, Carney noted.

"There are limits, of course, because of fiscal constraints at the macro level and the need to maintain incentives at the micro level. Fostering dependency on the state is no way to increase human agency, even though a safety net is needed to cushion shocks and smooth adjustment," he said.

Redistribution and fairness also meant "turning back the tide of stateless corporations," Carney said, urging multinational corporations to abide by the rules of the countries in which they operate.

Carney is also the chairman of the Financial Stability Board (FSB), the Basel-based international body that monitors and makes recommendations about the global financial system. The FSB was set up by the G20 nations in the wake of the global financial crisis. Endi