The Bank of England must work harder to improve the public’s understanding of economics after seeing trust in the organisation fall following the financial crisis, a key official has warned.
Andy Haldane, the bank’s chief economist, said economics was currently facing a “twin deficit” in which the British public failed to understand and trust economics.
He said efforts to improve understanding of economic policy would help people make better decisions while ensuring there is a “trusting and understanding” relationship between the public and the Bank of England.
In a speech at the Nishkam High School in Birmingham, he said central banks – such as the Bank of England, the European Central Bank and the US Federal Reserve – had failed to restore the level of public trust seen before the global financial crisis.
He said: “If economics or economic policy is elitist and inaccessible to most people, it is not doing its job.
“That is because the economy and economic policy affects most people’s lives, every day of their lives.
“More than that, an improved understanding of the economy and economic policy would probably help many people when making everyday decisions, big and small.”
Mr Haldane said its inflation report, which shows the bank’s latest decision on UK interest rates and a forecast for the cost of living, used language which could only be understood by about 5% of the UK population.
However, he said the bank was broadening its reach by simplifying its message and using story-telling techniques.
The Bank Underground blog, which is written by the Bank of England, is less complex than the inflation report and is accessible to about 20% of the adult population, Mr Haldane said.
He added: “The actions of central banks are important for most people at key decision points in their lives.
“At those points, a trusting and understanding relationship between the central bank and the public matters.
“It matters for people when making good decisions. It matters for the economy when following a good course. It matters for policymakers when setting good policy.”