So there is clearly still lots of work to do, and I hope to see more research dedicated to this subject in the future. Intangibles and Productivity I can now come full circle and consider the implications of the findings so far for another important equilibrium concept: potential output. As intangibles seem to be important for the puzzling weakness of investment, can they also help us rationalise recent developments in productivity and hence the implications for potential output? Page 14  Since the global financial crisis we have observed a substantial productivity puzzle. Average labour productivity growth in the United Kingdom has been around 1.3 percentage points lower since the crisis. While intangibles help to explain the missing investment puzzle, their effect on productivity is mixed as, if anything, there is evidence that they might be driving this productivity slowdown. Chart 9 shows that intangible-intensive industries have experienced the strongest slowdowns in labour productivity growth since the global financial crisis, consistent with a recent study by my colleague Jonathan Haskel. [23]  Chart 9: Productivity slowdown is stronger in intangible-intensive industries  Note: The y-axis shows the change in average labour productivity growth over 2008-2018 with respect to the 2000-2007 period. The x-axis covers the average share of intangible assets in total capital. Each ‘bubble’ represents an industry, with the area of the bubbles reflecting its share in total employment within each country, thereby measuring the industry’s contribution to aggregate labour productivity growth. EU4 consists of Germany, Spain, France and Italy. Source: Source.
In the Minutes of that meeting, the MPC emphasised that it will take the actions necessary to return inflation to the 2% target sustainably in the medium term, in line with its remit. The scale, pace and timing of any further increases in Bank Rate will reflect the Committee’s assessment of the economic outlook and inflationary pressures. The Committee will be particularly alert to indications of more persistent inflationary pressures, and will if necessary act forcefully in response. Bringing inflation back down to the 2% target sustainably is our job, no ifs or buts. Tonight I will step back from the current situation and consider some of the longer-term forces affecting our economy, and shaping the economic landscape in which monetary policy is conducted. Assessing the policy landscape Monetary policymakers are typically focused on cyclical movements in the economy, since monetary policy is often thought to have its most powerful effect on inflation 18-24 months ahead. As cyclical shocks hit the economy, monetary policymakers must analyse incoming data to identify the underlying causes and form a view on their implications for the outlook for GDP and inflation. Page 3  Adjusting policy in response to the cyclical shocks in the foreground of the macroeconomic picture is therefore a core part of our role.