In other words, looking at a cross-section of UK companies, secular innovation (for the upper 1% or 0.1%) has co-existed with secular stagnation (for the remaining 99%). The two are engaged, not so much in a secular struggle, as a secular stand-off. Technological diffusion, and hence productivity growth, has been the casualty. 67  Andrews, Criscuolo and Gal (2016). Department for Business, Energy & Industrial Strategy (2017). 69 Haldane (2017). 70 Productivity figures refer to the non-financial business sector, but other sectors for which data are not available over the full ten-year period are also omitted. 68  19  All speeches are available online at www.bankofengland.co.uk/speeches  19  There have been one or two recent studies which have been quoted as questioning the importance of this “long tail” issue for the UK. 71  These pieces use the same data used here. The problem arises not from the  data but from the (mis)interpretation placed on them by these studies. All of these studies show, very clearly, that the UK has a significant long tail problem. Appropriately defined, they also demonstrate that this tail has lengthened during the course of the crisis. To give one example, my Bank colleague Patrick Schneider recently published a blog post showing that a good chunk of the slowing of productivity growth since the crisis could be accounted for by workers in the top quartile of the productivity distribution. 72  This is entirely consistent with the tale of two companies.
Private consumption has been enhanced by wage growth and a low unemployment rate. However, it must be noted that while consumption of non-durables and services has remained relatively stable, durable goods consumption has recovered, partly due to the appreciation of the peso during the last year, and the necessary replenishment of inventories following several years of weak growth and even contraction. Something similar is observed with gross fixed capital formation in machinery and equipment. Excluding the purchase of non-regular transport machinery, this component of investment has improved in recent months. 8. In our baseline scenario, gross fixed capital formation will experience a slightly positive growth in 2017, after three consecutive years of contraction. A key factor in the negative figures we have seen the last few years is the end of the mining investment cycle, which reached its peak in 2012. More recently the deterioration of housing construction has added, as the boom triggered by tax incentives finished and a modification of loan-to-value norms reduced home sales. Going forward, our forecasts rely on an increase in non-mining and non-residential investment (mainly machinery and equipment). While mining investment will eventually return to positive territory during 2018, the gradual adjustment in residential investment is expected to continue during the following quarters (figure 5).