Centre for Finance, Credit and Macroeconomics (CFCM)

New Bank of England Decision Maker Panel established

Decision Maker Panel

Paul Mizen and Nicholas Bloom (Stanford University) are working with the Bank of England and HM Treasury to create a new Decision Maker Panel of senior executives from across industries and from around the country to collect information on how business conditions are changing in these times of substantial UK and international economic uncertainty. Paul Sheard, Exec Vice President and Chief Economist, S&P Global, a noted commentator on global economic trends said "Brexit represents an 'uncertainty shock' that will cause some businesses to cut back or delay investment and hiring in the UK and, to a certain extent, in the euro area too, until the uncertainties are resolved."

The Decision Maker Panel monthly online survey is designed to cover at least 2,500 firms. Each month the panel members will provide information on how business conditions are changing and, in particular, about the weight they attach to different possible outcomes for investment, sales, employment, costs, prices and margins. It will also be valuable for assessing the sectors, regions and firm types (eg small, young) most affected by uncertainty, where more immediate action to offer policy or institutional solutions may be required.

The information provided will support the work of the Monetary Policy Committee (MPC) of the Bank of England in assessing the prospects for the UK economy, vital at a time when the UK Policy Uncertainty Index shows a post-referendum uncertainty spike more than twice the size of any other event in the last twenty years. Policy questions from HMT, the Department for Exiting the EU and the Bank of England will feed into the survey, and the results will be used to help inform Brexit negotiations.

Ultimately the objective of the Panel is to produce a monthly index of business uncertainty for academics, financial firms, and financial data providers, and will provide economic impact assessments on investment, sales and hiring rates based on almost real-time information for policy analysis. An earlier economic policy uncertainty measure (EPU) has been developed by Nick Bloom and others, and it is accessible from market data providers such as Reuters, Bloomberg, FRED and Haver for researchers, policymakers, market practitioner and journalists to use, and the intention for this new measure is to follow a similar path.

Teams of analysts based at The University of Nottingham, Jubilee Campus and the Bank of England, Threadneedle St have been contacting senior executives from a wide variety of UK businesses with an invitation to join the Panel and complete the 4-5 minute survey each month. Businesses are selected to receive an invitation so that the sample includes businesses of different sizes, industries and regions that is representative of the UK economy. This work builds upon the success of similar surveys conducted in America by the Federal Reserve Bank of Atlanta and the United States Census Bureau, which have both achieved high response rates and invaluable insights to policy makers.

The Panel is funded by The University of Nottingham's ESRC Impact Accelerator Fund and by the Bank of England, with applications for further funding now under review.

Posted on Thursday 2nd February 2017

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