The balance between an economy’s capacity to supply goods and services and what is actually demanded is a fundamental driver of inflationary pressure in the medium term, and so central to the MPC’s task. The recent behaviour of productivity has been puzzling and worrying in equal measure. The level of measured productivity in the UK private sector today is lower than it was at the time of the financial crisis.1 We have had over three years of stagnant productivity. If private sector productivity had continued to grow at the average rate seen prior to the crisis of around two and half percent or so, the level of productivity today would be around 9% higher (Chart 1).2,3 What might account for the UK’s productivity shortfall? And what implications might it have for monetary policy? 1  The private sector has been approximated by excluding employment and output data for the public administration and defence, education and health sectors, reflecting that a significant proportion of these sectors are within the public sector. Workforce Jobs data on sectoral employment have been scaled to match aggregate employment levels indicated by the Labour Force Survey. Resulting calculations for the private sector are estimates only. Official ONS productivity estimates are for the whole economy and so differ slightly. 2  The productivity shortfall is measured in terms of output per head.
Despite a challenging environment, new issuance of sukuk in the global sukuk market rose by 43 percent to $ billion in 2009. However, developments in Europe resulted in a more cautious market and the global sukuk issuance declined by about 20 percent in the first half of this year. In the coming period, this trend is expected to improve as the Governments in Asia and the Middle East have already initiated the raising of funds for the implementation of infrastructure development and investment projects. This extensive interest in Islamic finance from different parts of the world is driving the international dimension of Islamic finance. This has contributed to the strengthening of financial and economic linkages between the more established financial centres of the Western world and the newly emerging financial centres in Asia and the Middle East. This has thus contributed to the more efficient allocation of funds across borders from centres with surplus funds to regions with investment opportunities. It has also allowed for more inclusive participation regardless of size and stage of development. Islamic finance now provides the range of financial products and services to multinational corporations, to micro enterprises and to households while at the same time, facilitates financing of international trade and cross border investment activities. This recent decade has also seen significant milestones being achieved in the area of international financial infrastructure that supports the development of Islamic finance.