Thank you  9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  Annex Chart 1: Level of GDP and potential output(a) Index 1997Q1 = 100 160 150 140 130 120 110  Potential output GDP  100 1997  2000  2003  2006  2009  2012  2015  2018  (a) Potential output is defined as the level of GDP achievable if all factors of production were utilised at their long-run equilibrium levels. Its projection is a matter of judgement for the Monetary Policy Committee, consistent with the Committee’s forecast for the output gap. The historic path therefore reflects, in part, a sequence of judgements by current and past MPCs rather than the output of any one model. Source: Office for National Statistics and Bank calculations Chart 2: Impact of Covid-19 pandemic on labour productivity as estimated from Decision Maker Panel (b) Percentage impact of Covid-19 on labour productivity per hour 12 10 Between-firm Within-firm  8 DMP Labour Productivity (private sector)  6 4 2 0 Feb MPR Labour Productivity -2 (whole economy)  DMP TFP (private sector)  -4 -6  2020 Q1  2020 Q2  2020 Q3  2020 Q4  2021 Q1  2021 Q2  2022+  (b) See Bloom et al (2020) for details. The impact of Covid-19 in the February 2021 MPR forecast is estimated as the difference between the February 2020 and February 2021 forecasts.
Employment, total hours worked and unemployment all tend to be highly persistent, so a rise in unemployment means – based on history – that it will be higher a year from now. That said, the UK labour market has adjusted relatively quickly to large shocks in the past (Broadbent, 2012). In normal times, around 9% of workers change jobs every year, but the tendency to persistence provides evidence from the past of the effects of a mismatch between the skills of job seekers and those required by hiring firms. As I noted earlier, some of the sectors hardest hit by the pandemic employ more young and low-skilled workers, who may find it hard to move between sectors (Haldane, 2020). That difficulty will be amplified if the jobs involve different tasks. Bank staff have analysed the task content of different jobs to quantify the extent of task reallocation required in various scenarios. In a relatively extreme scenario where the pattern of consumer spending is unchanged from 2020 Q3, staff estimate that the extent of the task reallocation over coming years would be higher than in the recent past, but much less than occurred during the 1980s and early 1990s. That was a period of 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  significant structural change during which the share of employees working in the manufacturing sector fell from 26% to 16%. There are two important points I would emphasise here.