The UK’s productivity growth challenge Dave Ramsden Deputy Governor for Markets and Banking Babraham Hall, Cambridge 23 rd February 2018
1. UK GDP growth Annual average growth, per cent 8 6 4 2 0 -2 -4 -6 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 1-2% Outturns February 2018 Inflation Report projection Sources: ONS and Bank of England
2. UK business investment cycles 180 1989Q3 1979Q3 160 1973Q1 2007Q4* 140 120 100 80 60 -20 -12 -4 4 12 20 28 36 44 52 Sources: ONS and Bank of England Vertical axis is indexed to 100 at time 0. Horizontal axis shows the quarters prior to, and since, the peak level of business investment. * Dashed blue line shows the MPC’s February 2018 Inflation Report projection
3. UK annual productivity growth (GDP per hour worked) 5 Annual growth, three-year moving average, per cent 4 3 2 1 0 -1 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: ONS
4. Sectoral contributions to productivity growth Contributions to hourly labour productivity growth * Sources: ONS and Bank calculations * Annual averages. Sectoral output per hour is calculated as gross value added divided by hours worked.
5. News-based policy uncertainty indices Indices, 1997-2010 = 100 1250 1000 750 500 250 0 1997 2001 2005 2009 2013 2017 UK Europe* US Source: "Measuring Economic Policy Uncertainty" by Scott R. Baker, Nicholas Bloom and Steven J. Davis at www.PolicyUncertainty.com * Constructed using newspapers from France, Germany, Italy, Spain and the UK.
6. UK annual productivity growth (GDP per hour worked)* 5 Annual growth, three-year moving average, per cent 4 3 2 1 0 -1 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Sources: ONS and Bank of England *Diamonds show the MPC’s February 2018 Inflation Report projection (three year moving average)
7. The MPC’s February 2018 GDP projection* Sources: ONS and Bank of England * Based on market interest rate expectations, other policy measures as announced
8. The Bank and new technologies
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