10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  Chart 9a: UK business investment underperformed compared with previous recoveries… Indices: peak in GDP = 100 180 160 140 Range of previous recessions  120 100 EU Referendum Act  2008  80 60  0  5  10  15 20 25 30 Quarters since pre-recession peak in GDP  35  40  Sources: ONS and Bank calculations Notes: Chained‑volume measure. Recessions are defined as at least two consecutive quarters of negative GDP growth. Previous recessions include those beginning in 1973, 1975, 1980 and 1990. A recovery ends if a second recession occurs in the period shown. Chart 9b: …and international experience Percentage changes on a year earlier (%) 20  G7 excluding the UK  UK  15 10 5 0 -5 -10 -15 Range across the G7 excluding the UK  2000  2002  2004  2006  2008  2010  2012  2014  2016  -20 -25  2018  Sources: Eikon from Refinitiv, Japanese Cabinet Office, OECD, ONS, Oxford Economics, Statistics Canada, US Bureau of Economic Analysis and Bank calculations. Notes: Chained‑volume measure. Business investment is not an internationally recognised concept. This swathe includes similar series derived from other countries’ National Accounts. Private sector business investment for Italy. Business investment minus residential structures for Canada. Non‑residential private investment for Japan and the US. Non‑government investment minus dwellings investment for France and Germany.
Certainly the portents are worrying. The storm that the modern Prospero has conjured is having an impact. Over the past year, the global economy has shifted from a robust, broad-based expansion to a widespread slowdown, with the proportion of the global economy growing above trend falling from four fifths to one sixth. In its May Inflation Report, the MPC projected that global growth would soon stabilise before recovering to around its potential rate by the middle of next year. This reflected: i)  the relative absence of fundamental imbalances in the global economy that would by themselves be expected to derail the expansion;  ii)  a considerable degree of expected policy support to the expansion; and  iii)  some positive momentum in trade discussions. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  On 5 May, with the ink on the MPC’s Report barely dry, President Trump announced further increases in tariffs on imports from China and China retaliated. Later that month, the US additionally threatened new tariffs on Mexico despite having only recently agreed a revised NAFTA accord. The US threat to increase tariffs on auto imports from Europe remains. The latest actions raise the possibility that trade tensions could be far more pervasive, persistent and damaging than previously expected. The rationales for action are broadening.