Chart 10  Chart 11  Whole economy real investment substantially weaker than pre-crisis forecasts  Advanced economy investment has fallen relative to GDP, remains lower than past episodes  Residual Non-residential Total  Equipment Residential  Per cent 10  1980  1989  0  2001  2007  pp fall in investment share of GDP 1.0  -10  0.5  -20  0.0 -0.5  -30  -1.0  -40  -1.5  -50  -2.0 -2.5 -3.0  Sweden  Switzerland  Germany  UK  Canada  US  France  Denmark  Italy  Spain  -60  -3.5 -4.0 -4.5 T  T+1 T+2 T+3 T+4 T+5 T+6 T+7 T+8  Years  Source: IMF World Economic Outlook and Bank calculations. 8  Source: IMF World Economic Outlook and Bank calculations. BIS central bankers’ speeches  Chart 12  Chart 13  UK business investment still short of pre-crisis share of GDP…  … and tracking below past cycle average Business investment, peak GDP = 100  12  Average of past cycles  11  2008  Nominal 10.5 10 9.5  Per cent of GDP  Real  130  11.5  90 80 70  8.5 2016Q1  2014Q4  2013Q3  2012Q2  2011Q1  2009Q4  2008Q3  2007Q2  2006Q1  2004Q4  2003Q3  2002Q2  2001Q1  Source: ONS and Bank calculations.
The charge that central banks are out of monetary ammunition is wrong, but the widespread absence of global price pressures demands that our firepower be well aimed. Indices of policy uncertainty are about 1¼ times their pre-crisis averages in the US and Japan, and as high as three times in China. In the UK, progress since the financial crisis has been more than totally unwound this year with the measure having risen to five times its precrisis average by the start of the official referendum campaign (Chart 3). 5  A closely watched measure of economic uncertainty – the VIX – spiked when the global financial crisis hit. Measures that combine this with other sources of economic uncertainty, such as dispersion among forecasters’ growth projections, households’ unemployment expectations, and currency volatility, show clear variation over time, and rise at times of economic stress. See Haddow, A, Hare, C, Hooley, J and Shakir, T (2013) “Macroeconomic uncertainty: what is it, how can we measure it and why does it matter?”, Bank of England Quarterly Bulletin, Q2. 6  One way some of this has been measured is again to count occurrences in media articles of references to economics, uncertainty, and policy terms like “deficit”, “regulation” or terms relating to monetary policy. See: Baker, S, Bloom, N and Davis, S (2015), “Measuring economic policy uncertainty”, NBER Working Paper No. 21633, October. BIS central bankers’ speeches  3  While clearly these three uncertainty measures are related, distinct movements are visible.