Uncertainties will weigh near term, but an orderly ‘deal’ exit from the EU leaves scope for a visible rebound of sterling in the first half of the year. Finally, further escalation in the trade war will weigh on the Chinese currency.
Overall, its current level is in line with its average rate of 0.9% over the past ten years. From a longer-term perspective, labour productivity developments in the euro area are characterised by a sustained slowdown since the early 1960s, which mainly reflects both lower growth in innovation and other efficiency gains and lower growth in capital used per unit of labour.