Chart 4: Investment consistently weaker post-crises Average financial recession Cumulative change (per cent)  Average normal recession  20 15 10 5 0 -5 0  1  2  3  -10  4  5 Years  -15 -20 -25 -30 Source: Jordá, O., Schularick, M. and Taylor, A. (2013), ‘When Credit Bites Back’, Journal of Money,Credit and Banking, Vol. 45, Issue s2. Notes: The chart shows the cumulative change in per capita investment. The grey shaded area shows a 95% confidence interval around the average normal recession. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  Chart 5: UK, US and euro-area capital overhangs being worked off  UK capital to output ratio  Euro area capital to output ratio Euro area trend capital to output ratio US capital to output ratio US trend capital to output ratio Per cent 340  Per cent 130  UK trend capital to output ratio  120  320  110  300  100  280  90 80  260  70  240  60  220  50 1995 1999 2003 2007 2011 2015  200 1995 1999 2003 2007 2011 2015  Sources: BEA, OECD, ONS and Bank calculations.
As I have previously stated, against the background of the drawn-out recovery and the weak labour market, we at the Riksbank expect a wage increase rate for 2010–2012 of approximately 2.5 per cent per year, lower at the start and higher towards the end of the period. This is a very low rate of increase, historically. Our forecast will no doubt be considered to be too high by many on the employer side and, likewise, too low for many on the union side. The wage development we expect is consistent with an underlying inflation rate reaching 2 per cent by the end of the forecast period. All other factors being equal, higher wage increases in this situation tend to lead to higher inflation, higher interest rates and a weaker development of production and employment. Similarly, lower wage increases tend to lead to lower inflation, an ability to maintain low interest rates for a longer period of time and a stronger development of production and employment. 6  BIS Review 11/2010  One factor that will undoubtedly play a major role in the approaching rounds of wage bargaining is the division of the Swedish economy. The differences in the ability of various industries and companies to bear a certain rate of wage increases are currently unusually great. The development of wages along similar lines in different parts of the economy would lead to smaller pay differences, but also to a faster transformation of the economy.