The Bank of England’s Decision Maker Panel (DMP)

Real-time business data collected through social science research is fundamental to decisions being made by the Bank of England.

The challenge

Prior to 2016, the Bank of England and the UK Government mainly relied on business insight based on small, unrepresentative surveys, while official statistics were available but with a significant lag. The policy responses required to deal with uncertainty around Brexit and COVID-19 needed more reliable, granular and timely information for immediate use. The DMP provided real-time data for these needs. It continues to provide monthly data update and quarterly summaries which are used by the UK Government and the Bank of England.

The research

The DMP provides analysis of business responses to current conditions for policymakers in central government by revealing information not available anywhere else about business uncertainty, expected sales, employment and investment in the future. The panel draws information from Financial Officers in UK companies operating in a broad range of industries and is designed to be representative of the population of UK businesses.

A summary of results from the Decision Maker Panel is published once a quarter by the Bank of England alongside intelligence gathered by the Bank’s network of Regional Agents. The DMP is used to evaluate and improve the effectiveness of policy and budgetary measures designed to protect jobs and businesses, and to stimulate economic growth.

Key findings

Because the DMP provides monthly data and updates and quarterly summaries its findings are constantly changing to reflect what is happening in the economy and its impact on businesses. In its updates and summaries, the DMP shares its findings on topics including:

• Consumer spending
• Investment
• Trade
• Business and financial services
• Manufacturing and production
• Construction
• Corporate credit conditions
• Employment and pay
• Costs and prices
• Property including the housing market and commercial real estate

There have of course been numerous interesting findings from across the period the DMP has been in operation.  Here are just a handful of examples:

• The DMP has shown that very few prices ever change by 2% despite the Bank of England having a 2% annual inflation rate target in the ONS’ consumer prices index.
• DMP research in 2023 showed that measures targeting salary increases or excess prices could help the Bank of England keep inflation under control.
• In 2023 the DMP showed that ‘greedflation’ was at play with firms intending to keep prices high despite falling costs
• In 2021 the DMP showed that 85% of firms in Britain were finding it harder than normal to recruit new employees, and 58% reported it was much harder.
• In 2021 the DMP found that employees reported that working from home at least two days per week is a perk regarded as worth about 6% of wages
• DMP data suggested that a four-day-week could help improve productivity.

The impact

With its regular updates the DMP is continually making an impact with its data. Here are a few examples of some major specific impacts:

• The Bank’s Monetary and Financial Policy Committees used DMP data on business investment, sales and employment as well as uncertainty to justify policy decisions in numerous speeches and official publications such as Inflation/Monetary Policy Reports.
• The DMP data on business uncertainty persuaded the Chancellor to raise the Annual Investment Allowance in the 2018 Budget from £200,000 to £1m per annum, allowing over 1,250,000 businesses to invest £19.5bn in the UK economy tax free in 2019-20 alone.
• Data from DMP on the impact at the industry level helped the government design the Coronavirus Job Retention Scheme (CJRS) ‘furlough’ and grant support schemes saving many jobs and enabling businesses to survive when the country was in lockdown.
• The DMP demonstrated that it was possible to collect data from business executives in a new way that offered more quantitative and timely information. This changed the mind-set of the Office for National Statistics, who developed their own fortnightly Business Impact of Coronavirus survey (BICS) to understand the effects of the Covid-19 pandemic on business.

Find out more

• Learn more about the Decision Maker Panel

• Read this paper on the DMP’s findings: The impact of Covid-19 on Businesses’ Expectations: Evidence from the Decision Maker Panel