17  18  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  18  Chart 15: Global Dependency Ratios  160 140 120 100 80 60 40 20 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060  0  World Middle-income countries  High-income countries Low-income countries  Source: United Nations, Department of Economic and Social Affairs, Population Division Note: Dependency ratio is population aged 0-19 or 65+ per 100 aged 20-64  A second supply-side effect working in the same direction is globalisation. The world witnessed many decades of under-interrupted growth in world trade and global value chains after the Second World War, much of it associated with the rising role of China in the world economy. 19 On average since 1983, global trade volumes have risen by around 5½ % per year, roughly double the rate of growth of the world economy. The Covid crisis has decisively broken those trends. Global trade volumes collapsed by around 15% at the peak of the Covid crisis, compared to a fall in global activity of around 9% (Chart 16). The crisis saw the fracturing of some global value chains, in part as a result of countries prioritising domestic over international supply of some goods and services.
Table 1 shows peak levels of the primary fiscal deficit in the UK during the global financial and Covid crises. The degree of fiscal support has plainly been materially larger – more than twice as large. And relative to the size of the economy’s output gap, which is smaller than at the time of the global financial crisis, this degree of fiscal support has been larger still and multiplies of the output gap. Table 1: Peak Fiscal Deficits in the Global Financial and Covid Crises Peak primary balance (a)  Peak output gap (b)  Global Financial Crisis  -8.3  -4.2  Covid Pandemic  -18.0  -3.1  Source: OBR and Bank of England Note: (a) % of GDP. (b) % of potential GDP. Fiscal numbers for pandemic are based on OBR November 2020 forecast for FY 2019-20. The appropriate degree of fiscal support to close the output gap has recently been a source of debate in the United States. 21 There, the fiscal response is prospectively larger than in the UK, and the output gap smaller, meaning the upside risks to demand and inflationary are likely to be larger. 21  For example, see Olivier Blanchard here. 21  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  21  (e) Psychological Scarring A final potential difference from the past concerns the degree of psychological scarring of risk appetite among household and companies as a result of crisis.