at  Barnett, A, Batten, S, Chiu, A, Franklin, J and Sebastiá-Barriel, M (2014a), “The UK productivity puzzle”, Bank of England Quarterly Bulletin, Vol. 54, No.2, pages 114–28, available at http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q2.asp. Barnett, A, Broadbent, B, Chiu, A, Franklin, J and Miller, H (2014b), “Impaired capital reallocation and productivity” National Institute Economic Review, No. 228, 2014. Dustmann, C, Frattini, T, and Preston, I (2013), “The Effect of Immigration along the Distribution of Wages”, Review of Economic Studies, Vol. 80, No. 1, pp. 145–73. Gardiner, L (2014), “All accounted for: The case for an ‘all-worker’ earnings measure”, Resolution Foundation Briefing. Goos, M and Manning, A (2007), “Lousy and lovely jobs: The rising polarisation of work in Britain”, Review of Economics and Statistics, Vol. 89, No. 1, pp. 118–33. Goos, M, Manning, A and Salomons, A (2009), “Job polarization in Europe”, American Economic Review: Papers and Proceedings, Vol. 99, No. 2, pp. 58–63. Gordon, R (2012), “Is US economic growth over? Faltering innovation confronts the six headwinds”, NBER Working Paper 18315, available at: http://www.nber.org/papers/w18315.pdf Gregg, P, Machin, S, Fernandez-Salgado, M (2014), “The squeeze on real wages – and what it might take to end it”, National Institute Economic Review, No. 228, 2014. Haldane, A G (2014), “The corridor of uncertainty”, speech at the Scarborough Business Ambassadors’ dinner, 18 June 2014, available at http://www.bankofengland.co.uk/publications/Pages/speeches/2014/738.aspx.
Chart 7 plots the path of real GDP following five UK recessions and subsequent recoveries: the 1930s, the 1970s, the 1980s, the 1990s and currently. The fall in GDP during this time’s crisis is little different than in the 1970s and 1980s and smaller than in the Great Depression. 5  Again, the value for 2014 is an estimate based on projections consistent with the August 2014 Inflation Report. BIS central bankers’ speeches  3  The subsequent recovery in output has been materially slower than in the 1970s, 1980s and 1990s – and slower even than in the 1930s. As a result, the cumulative loss of output from this time’s crisis will very likely be larger than followed the Great Depression. Nonetheless, once you allow for the longer lags, the growth in GDP over the past two years has not been greatly dissimilar to previous recoveries. And if you believe the MPC’s growth forecasts, that recovery is set to continue in the period ahead. At a global level, the IMF’s recent World Economic Outlook paints a not dissimilar picture. Although global growth was revised down, it is expected to pick up from 3.3% this year to 3.8% next and 4.0% the year after. In other words, the IMF also foresees a slow march back to growth normality, albeit at potentially somewhat lower trend rates. So why might this time be different? One illuminating piece of evidence comes from looking at how forecasts for real wages, productivity and real interest rates have evolved during the recovery.