Andy Haldane, Chief Economist at the Bank of England spoke to an audience of 50 of the Chamber’s Diamond Ambassadors at an event at Stanley House. Andy, one of the most influential people in the country when it comes to the economy, spoke about innovation, the state of economy, Brexit and the UK’s productivity puzzle.
His visit to East Lancashire was part of the Bank of England’s open-door policy to understanding better what is happening in the real economy. He gave the bank’s view of the economy saying that any rate rise would be small and that the Bank expected growth to be maintained at around 2%. He described the functions of the Bank of England and outlined the biggest problem facing the economy.
Productivity is a main issue for the economy where growth is driven by either increased output per worker or more workers. Andy said “We are great at the R in R&D. But, we are not so good at the D: the development and the dissemination of those ideas.”
He added, “There are frontier companies, on the high road, but they make up only a small number of companies, there is also the long tail of companies on the low road. Many companies have not improved productivity levels since the turn of the century.”
This he described as the UK’s productivity puzzle. He told the audience that over the past decade the average productivity per worker has not moved, and you have to go back to the 18th century to see a similar period of stagnant productivity, saying “It’s been flatlining, that is not only unusual but unique. Although falling productivity is a global phenomenon, the deterioration is sharpest in the UK where productivity per worker is one of the lowest in the developed world.”
Andy added “Our low productivity is important because it’s why real wages have been flatlining over the last decade. It’s important that we diagnose the problem so that we can help find a solution.”
Following his informative presentation, he took extended questions from an audience keen to learn more from one of the foremost experts on the British economy.
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