Since the start of the crisis, output per hour worked has fallen by around 5%, leaving it more than 15% below where it would have been if it had simply continued growing at its pre-crisis trend rate. As discussed in past Inflation Reports, as well as numerous speeches by MPC members, there are a variety of explanations for this weak productivity performance. These include: specific factors, such as the decline in North Sea oil production and an exaggeration of productivity growth in the financial sector before the crisis; the hoarding of overhead and skilled labour through the downturn; unusually low rates of investment on the back of heightened uncertainty about the outlook; the adoption of more labour-intensive production techniques, encouraged by the high degree of wage moderation; thick-market externalities, which make it easier to find and transact business when demand is strong; and a misallocation of credit as banks repair their balance sheets, with heightened forbearance shown on existing loans to low productivity firms, coupled with caution as regards lending to risky businesses that offer the prospect of higher productivity. Some of these mechanisms depressing productivity can be expected to unwind naturally as demand recovers. But others might take longer and require the restoration of the banking system to full health. And some of the lost productivity growth may prove to be permanent, for instance because of the foregone opportunities for learning by doing.
Ravi Menon: Data and technology for climate action Keynote remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at COP26 Investor Action on Climate Webinar, 29 June 2021. * * * Distinguished guests, ladies and gentlemen, good morning. Why are we here? Three reasons: First, climate change is the defining crisis of our time – it is already happening, the worst is yet to come, and there is much at stake globally for lives and livelihoods. Second, finance has a key role to play in supporting the world’s transition to a greener and more sustainable trajectory. Third, to enable green finance flows and address climate related risks, we need trusted, timely, and relevant data. I take it we are all on the same page on the fact of climate change and the role of green finance, so let me focus on issues relating to data – which is a critical foundation for the green economy architecture the world needs to build. Financial institutions need accurate, granular data to assess and manage the environmental risks in their portfolios. What kind of data? For example: geographical, climate and weather-related data on their assets as well as along the supply chain; data on firms’ carbon footprint, historical carbon emissions, and pathways to reduce emissions over time; data on energy use and efficiency of physical assets, such as real estate; and data to monitor customers’ compliance to ESG standards and to measure the impact of transition activities on the climate.