MNI POLICY: BOE Haskel: Policy Transmission Hit By Intangibles

By David Robinson

     LONDON (MNI) - Bank of England Monetary Policy Committee member Jonathan

Haskel said in a speech in York that the growth of intangible assets could

impact both policy transmission and financial stability.

     The following are key points from the speech, which did not address current

monetary policy setting:

     --Haskel focussed on his signature research topic: the rapid growth in

firms' intangible assets such as software, reputation and knowledge relative to

tangible capital, such as hardware and buildings.

     Haskel had previously said that Brexit uncertainty could be a key factor

behind recent weakness in UK investment but here he floated the idea that it may

also reflect under-recorded investment in intangibles.

     "Intangibles appear to be part of the story (behind weak investment) but

not all of it," he said.

     --He said that new firms in particular which rely on intangibles may have

to shift their financing away from traditional bank lending which uses

tangibles, such as buildings, as collateral.

     "There are implications for financial stability and monetary policy

transmission, but the overall balance of direction is not clear," he said.

     --Haskel said that the way profits are marked up from intangibles, with

high profile brands, for example, able to achieve premium prices, could impact

the dynamics of output, wages and inflation. 

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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