What is wrong with UK productivity? How much of a puzzle is it?

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The UK economy is registering very good numbers on the output and on the labour market front right now. The first quarter of 2014 saw the official GDP (Gross Domestic Product) numbers register quarterly growth of 0.8% which according to the NIESR has picked up to 0.9% in the 3 months to May. The labour market has seen saw 780,000 more people employed in the year to April and 347,000 fewer unemployed as the unemployment rate has fallen to 6.6%. These positive quantity numbers have pushed our economy forwards although there is a price issue in the labour market as we note that regular pay in the year to the single month of April rose by 0.4% andso it fell by 1.4% compared to official inflation and 2.1% compared to the Retail Price Index. One factor which is interlinked and entwined with the disappointing wage numbers has been the behaviour of UK productivity and it is this which I intend to put uner the microscope today.

The productivity gap

Ordinarily the numbers above for output and employment would be associated with rising productivity but the credit crunch era has been full of apparent contradictions and changes in consensus thoughts. Here is the view of the Bank of England in today’s Quarterly Bulletion.

Since the onset of the 2007–08 financial crisis, labour productivity in the United Kingdom has been exceptionally weak. Despite some modest improvements in 2013, whole-economy output per hour remains around 16% below the level implied by its pre-crisis trend.

Rather chilling numbers aren’t they? They are almost of a level which would require a warning that they are not for those with a nervous disposition. However I note the use of the word labour in front of productivity so let us be clear what is being discussed.

The level of labour productivity…. measures the quantity of output that an economy is capable of producing with its existing resources.

This particularly matters for the Bank of England because of this relationship.

Measures of productivity are also important for the conduct of monetary policy, since they can be used to infer the economy’s ability to grow without generating excessive inflationary pressure.

So we have another explanation for the way that the UK economy suffered from an inflationary surge in a recession/depression. This is awkward for the Bank of England which at the time told us it was “temporary” but now gives us (another) reason why it persisted although they do not put it quite in those words!

A problem

Some care is needed here because of this point.

In the long run, technological progress, which leads to advances in measured productivity, is one of the main determinants of economic growth and improvements in standards of living.

The Bank of England has gone back to 2008 and projected the previous growth forwards. Have you spotted the flaw? Some of the productivity “growth” for example in the banking and financial services sector never existed and was aa the pop group Imagination put it “Just an illusion”. This not only has the numbers here starting at too high a base but has too high an expected growth rate as well.

However there is an issue even allowing for the factors above as explained below.

Even six years after the initial downturn, the level of productivity lies around 4% below its pre-crisis peak, in contrast to the level of output, which has broadly recovered to its pre-crisis level.

The story starts well

During the recent recession, employment has been more resilient than in the 1980s and 1990s downturns, despite the larger fall in output.

Before the credit crunch economic journals were full of articles asking businesses to behave like this. However it turned out to have at least some elements of “be careful what you wish for in it” as after it happened they now worry about the productivity consequences. The same number of people with lower output means lower productivity. As firms who had shed jobs in the past had struggled in the recovery phase to employ the same quality workers we may have been exchanging a short-term weakness for longer-term improvements. If so it would not be unreasonable to be hoping to see the improvement phase appear soon.

How does the Bank of England explain developments?

Measurement problems

This is a regular theme of this blog and the authors of this report are concerned about our GDP statistics. However sadly they think that what I regard as double-counting Research and Development (R&D) will help which is awkward to say the least if we look backwards for comparison as it was not (double) counted then was it? Re-writing of history seldom ends well. Maybe this recession will be revised in a positive manner over time like the majority of its predecessors but we may also discover one more time that it was a very different type of slow down.

They feel that if they add in other issue that around a quarter of the issue may be covered here. Extreme care is needed in my opinion as they do not know this.

Another UK “puzzle”

This is simply self-employment. In truth the official statistics tell us only one thing which is that it has grown. We know little about earnings as they are not counted in the official number so we only get very lagged glimmers of light from the income tax numbers. We also are very unsure about their output and hence cannot have a real clue as to their productivity.

As they have told me they do read my blog my suggestion to the UK Office for National Statistics is that they put a lot of effort into improving their measurement of the UK’s self-employed sector. Up to now we are viewing it through something of a smokescreen.

Investment issues

We have been investing less or as the Bank of England puts it.

Investment in the physical capital stock has been subdued in the aftermath of the crisis.

They also point out that relative costs may have reinforced the way that the labour situation has improved whilst investment has struggled.

In addition, because real wages fell considerably whereas the cost of capital initially increased at the start of the crisis, the relative cost of labour to capital is likely to have fallen.

The Bank of England estimates that around 2.5% of the productivity puzzle can be explained here. As they investigate the rest of this area and issues with what they cosider to be a falling amount of R&D they offer a daming critique of counting it in the GDP numbers.

But R&D expenditure is only a measure of innovation input.

Measures of innovation output are, for example, the proportion of companies that have introduced new goods or services.

Ahem exactly! Is there an economics equivalent for the concept behind a Freudian slip?

Investment misallocation

Here we have a conceptual issue as the Bank of England do not put it quite like this. Let me explain why. If you think that the monetary easing measures and bailouts have allowed firms with what might be called debt based business models to survive then a driving force of capitalism described so well by Josef Schumpeter as “creative destruction” has been blocked. I can understand why economist who presumably wish to have a career path at the Bank of England may wish to divert around and gloss over such an issue!

Another issue to be faced here is thet fact that some of what was considered to be productive investment pre credit crunch no longer is. In terms of calculations you could argue that it simply vanished although it is in many ways more accurate to say that we were over measuring it back then. Of course part of this road leads us back to creative destruction or rather the lack of it.


I welcome the efforts of the Bank of England economists here as our knowledge is so disappointingly finite. All though they end up reminding us that we can be sure of so little. Perhaps their analysis expalins half of the problem that they identify. Although care is needed in my opinion as extrapolating the past through a period of extreme change is unwise and frankly is misleading. I am reminded of the words of a column in the Financial Times written by Willem Buiter who was a tutor of mine at the LSE.

I know I know nothing: but at least I know that

If we move to more general central banker matters I note that the Wall Street Journal has covered a development which readers of this blog will be familiar with. This is the movement of equities onto the balance sheet of more and more central banks. Let me leave you today with this question. In the future will all central banks be hedge funds?




This entry was posted in Bank of England, GDP, General Economics, Quantitative Easing and Extraordinary Monetary Measures, UK Inflation Prospects and Issues and tagged , , , , . Bookmark the permalink.
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  • dutch

    So we have output up,employment up and productivity down.

    I’m still unsure as to the exact way they measure productivity but it’s a rather academic issue when you consider the utterly misrepresentative ways they assess employment and GDP.

    You highlight the growth of self employment which cynics such as I would put down to it being a lot easier and less hassle to access benefits when you’re working part time instead of getting grief every time you sign on for JSA.Getting 10 hours a week at Sports Direct is not a job in the traditional sense of the word to me.

    As for GDP,you rightly highlight the distortions of the double counting of R+D and have previously covered variously,prositution,drugs,imputed rents etc.

    The middle and working classes of this country who aren’t dependant on the govt for their income have been hammered over the last five years and it says a lot that you have to come to obscure(hopefully not for much longer) corners of the web like this blog to find a discussion of it.

    Good on you Shaun.

  • Dave Holden

    Always though I was missing something on this as it’s always struck me that If “productivity” = GDP/hours worked then illusory pre 2008 GDP (because of a credit boom) = illusory pre 2008 “productivity”.

  • dutch

    Below is an article on the destruction of decent paying manufacturing jobs in the USA.It poses the question to me of what’s happened to median average incomes in the UK and whether they’d be anywhere near where they are now without the govt running a 5%+ fiscal deficit?

    Aside from the chronic bloat in the SE,most people feel far poorer than 5 years ago and it seems a singular achievement of the govt statisticians of all hues,that they’ve managed to gloss over it by misrepresenting inflation,debt,employment and growth.

    rant over


    ‘Income gap widens as American factories shut down’

  • Forbin

    I can assure you even here in sunny surrey that theres a growing divide between the haves and have nots

    I cant even afford to buy my own house now ….. if I trying to buy it today that is …..

    good job my popcorn ration has gone up to 2 oz from 4 oz ……

    along with my wages .


  • Anonymous

    No! We shall never refer to 2008 as a complete lie. It was *the truth*, the beacon to which we must always lift our eyes.

  • Forbin

    Hello Shaun ,

    ‘The Bank of England says productivity is 16% below its pre-crisis trend – but says it is at a loss as to why this is….”

    And Charlie Bean been knighted for this ?

    “they are at a loss…..”

    I’m at a loss as to why these bozos are still employed yet alone knighted…..

    and people wonder why the country is such a mess?

    well those ones not playing fantasy football of course….

    ( or fantasy economics….. )


  • GusBmth

    Hi Shaun

    There is something utterly disingenuous about the Bank’s analysis that:

    ‘In addition, because real wages fell considerably whereas the cost of capital initially increased at the start of the crisis, the relative cost of labour to capital is likely to have fallen.’

    They seem to ignore the fact that the Base rate is the lowest in over 200 years and the Bank made £ billions available to the banking sector through Funding for Lending specifically to reduce the cost and increase the availability of capital to the business sector.

    What it points to is the fact that businesses have struggled to secure medium and long term finance for capital investment on reasonable terms for many years, especially if they are an SME; and that this has got worse over the past few years. Instead, the banks are happy to lend to large highly indebted companies, with business models focussed on maximising financial gains for owners, with the minimum possible capital investment.

    In essence, part of the reason for the poor productivity growth is a classic mis-allocation of capital by the banking sector. The shocking thing is that the State is a major owner of the banking sector and yet the situation has got worse, not better.

  • Jim M.

    Hi Shaun,

    WRT the difficulties you identify with the numbers on self-employment, I would suggest we adopt the approach of the ONS that you so kindly led us to the other day… replace non-existent and inconvenient data-sets with more convenient guesstimates and Robert’s your mother’s brother!

    Problem solved… a little massaging and the economy will soon be as right as rain!

    Or we could perhaps just pray that Amen Corner take over at the BoE?

    “Bend me, shape me, anyway you want me
    As long as you love me it’s all right
    Bend me, shape me, anyway you want me

    you got the power to turn on the light”


  • Anonymous

    But it was a moment of truth, just like the busting of the Dutch tulip boom – when the banks were outed from the insolvency closet.

    Iceland had creative destruction of bad banks but Europe prefers to copy Japan’s lost decade(s)

  • Anonymous

    Agreed. There really is a full on insanity to the news now. Reminiscent of the film Brazil. All the talk is of “terrorists” in different countries as the US looks to get a free pass on bombing them to ash. I know people have said this for the last five years but now the newspeak seems far stronger even than 2008.

  • Eric

    Hi Shaun,
    If I remember rightly, “temporary” morphed into “temporary albeit protracted” at some stage in the annals of the bank; but I can’t locate the exact quote.

    The whole thing is a puzzle to me. For example, 5 years of ZIRP should have produced a roaring economy. How many 1970s economic students would have correctly described the effect of ZIRP?

    When your foot is on the floorboards and the engine is screaming but the car is only crawling along you have to conclude that something is seriously wrong even if the mechanic is “at a loss”. – Worse still, the dials and flashing lights on the dashboard only generate more confusion.

    Maybe the mechanic himself had something to do with it.
    As Dickie Valentine said – “The Finger of Suspicion points at you”

  • Anonymous

    Hi Dutch

    Thank you for the compliments. I do my best to spread the message and I do get contacted by various areas so it is reaching out. As to why places like the BBC and the FT for example prefer other source matter I think is a matter for them and their consciences.

    I think that the self-employment picture is complex. Plainly some of it is covered by the type of issue you highlight and has a negative theme. However there are also some who chose to do it and this is more positive albeit that some of them have decided that modern employment and management “sucks”. But from the official data we learn little.

  • Anonymous

    Hi Guys

    This issue troubles me too as Iraq is showing many of the signs of South Vietnam in the 1970s. A lot of people died to supposedly make it “a better place”. If the videos showing 1700 executions are even partly true what sort of “better place” is it?

  • Anonymous

    Hi Forbin

    I meant to mention the “K” for Charlie Bean today so thank you for the reminder. I was busy on this subject on Friday/Saturday on twitter.

    He now has a K and a pension pot of £3.96 million according to the Bank of England’s 2013 accounts. For what exactly? Those who defended him on twitter have yet to reply question….

    As to your fantasy economics game it is a good idea. The only catch is how we tell it from reality?!

  • Anonymous

    Hi Gus

    You are entirely right. Ordinarily I am a fan of consistency but this aspect of the Bank of England’s behaviour where it ignores the consequences of its own actions is not far off shameful. The changing role of central banks means that their analysis is as partial as that of broking firms now. I am trying to think which of the science fiction novels covers your own past being invisible to you…

  • Anonymous

    Hi Jim M

    I fear that some if not much of the data we have (including the official data) will send us in the wrong direction. This is a major factor in my view that “fine-tuning” of the economy will inevitably disappoint. Before we get to the rights and wrongs of individual decisions the data does not stand up to such scrutiny.

    As for the song I have not hear it for ages. Those 1960s videos are quite something aren’t they?

  • Anonymous

    Hi Eric as to your question I would suspect on those on a really bad trip!

    As to Bank of England explanations they did some research recently which suggests that the base rate cuts boosted GDP by between 2.5% and 3%. Under their rule of thumb the 2007/08 fall in the value of the pound £ had a similar effect. Then there is QE which Martin Weale told us boosted us by say 3%.

    So our economy apparently went through the roof whilst also flatlining? It may be that it is not only physicists who speculate on alternative universes..

  • Noo 2 Economics

    I think they’ve been sparing with the truth. If memory serves the base rate was steadily increasing until late 2007 at which point it began falling. Some places consider the depression began in Autumn 2007 for the UK but even though base rate started falling in late 2007 business/personal lending rates continued up until early 2008.

    Therefore they can get away with saying “the cost of capital initially increased at the start of the crisis”. I think a lot of thought went into that comment before it was written down, at the end of the day these are civil servants and pedants to a (wo)man……

  • Noo 2 Economics

    “albeit that some of them have decided that modern employment and management “sucks”.”

    Second that, I’m one of them – started in Autumn 2007 just as the economy turned doh! Had a tough time the first 18 months and then things got better and better, now I can’t imagine working for any one ever again.

  • David Lilley

    I may be wrong but I think I have a contribution to the productivity puzzle.
    All that you say above is true but we have to put some more detail into the differences between 2008 and today and explain why 2008 was out of the ordinary and not the best baseline to make comparisons with.
    If the productivity puzzle is “How come employment has gone up considerably yet we are only producing the same as we were in 2008?” Or as one on your commenters put it “labour productivity is GDP/hours worked”. In numbers, GDP is back to the 2008 level whilst hours worked is up 16%.
    Stephanie Flanders of the BBC first introduced the productivity puzzle to me some two years ago ” How is it that employment has risen considerably yet GDP is flat, does it take more workers to do the same amount of work as last year?” Her best answer was “hoarding of labour” which is plainly rubbish.
    The big difference between what many (and if I may say, idiots) call the boom years, 1997-2007, and the last six years is that we have moved from leveraging to deleveraging. GDP was artificially inflated in the “Nice Decade” by borrowing from future income and spending it today. GDP is deflated in the last four years as net debt (personal, corporate and sovereign) is reduced.
    Productivity has gone up rather than down. Ask any private sector worker, and even some public sector workers, if they are working harder today than they were in 2008. The deadwood has gone, often replaced by more productive guest workers, and sickies have crashed. Employers, the only UK humans to live in a survival of the fittest environment, cannot hoard labour and have only retained the most productive. Productivity has increased, real GDP has increased. The only thing to decline has been artificial GDP, that portion of GDP that was due to leverage. We should go forward measuring real GDP stripped of leverage and deleverage.
    Below is what I posted at the time of the 2010 election on our incredible leverage in the 1997-2007 period.
    “They (our servants) borrowed £30-£40b every year since 2003, grabbed £15b pa from pension funds (forcing employers to scrap their defined benefit schemes or fund the missing £15b from profits which in turn takes £15b from investment in UK wealth creation), drove people into property as the FTSE
    suffered the loss of £15b pa, ran up an off-balance sheet debt of £300b in PFI, allowed mortgage debt to sky-rocket to £1.2t, allowed £400b of home equity release and allowed banks to multiply their lending reserve by as much as 30 times deposits.

    The result is that today we have personal debt of 1.06 x GDP, corporate debt of 1.26 x GDP and sovereign debt of 89% of GDP. All affordable when interest rates are low but all having to be paid back.

    Debt is where you go when you cannot make ends meet. It is bringing forward future earnings. It is like earning £100 per week and taking a one-week sub and telling everyone you are on £200 per week.

    GDP is measured in three ways that all give the same answer. It is basically the summation of all transactions. It peaked at £1.5t in 2007, as did personal debt (£1.2t of which was mortgages).

    Nevermind GB’s claim of 53 quarters of growth and the best chancellor ever. Just looking at a simple model; personal debt rising from 0 to equal to GDP between 1997 and 2007, and assuming it is linear, it takes real GDP from +3% to –7%. We were spending money and providing jobs that derived from home equity release, PFI, mortgages and personal, corporate
    and sovereign loans.”
    Please bear in mind that these numbers are vintage 2010 and that my simple model is simple in that it assumes zero debt in 1997.
    The big take-home from these numbers is that we certainly were not having a nice decade in 1997-2007 but we are doing a lot better than we think we are today because we are doing it in a deleveraging environment.
    Please give me some negative comments.

  • Noo 2 Economics

    Afraid I can only agree with you David, I was having the same thoughts earlier this year but it looks like you beat me to it by about 4 years.

    Actually, I can argue about employers being unable to hoard labour, I’m sure you understand that any monopolist (BOC) or oligopolist (the banks) with high barriers to entry in their respective disciplines can afford to hoard labour as there is no effective competition.

    I know banks are a bad example as they have shed labour, but only because they made such a mess they’ve ended up on income support from the DWP, excuse me, I mean they have been benefitting from QE and funding for lending alongside simply being bought out lock stock and failing asset so they have to look like they’re doing something in case their personal banker (the tax payer) starts getting a bit fractious.

    Anecdotally and now I’m starting my rant which is nevertheless applicable to this question), I’ve noticed that basket case of a supermarket – Morrisons has a lot more new staff/managers running about now with bluetooth like apparatus attached to their heads shouting down their speaker phones frantically as they pretend to be organising the store staff and ensuring more efficient allocation of labour resource, whilst the aisles are wider and they carry less lines.

    They have also invested in a ridiculous dry ice cooler for the fresh fruit which was strategically placed under the climate control machines just inside the main entrance where, of course, said machines are always blasting down hot air onto the dry ice cooler (and fresh fruit) as the automatic doors are always opening allowing colder air from outside in.

    Here is a concrete example of falling productivity, labour hasn’t been hoarded, rather, it has been increased whilst less is sold because less lines are carried due to widened aisles and running costs are up due to the fiasco described above re the interaction of climate control machines with dry ice coolers and automatic doors at the main entrance.

    I’m sure you know about Morrisons’ losses and their share price. It’s causes are called poor management and I’m sure there are many other examples like this which would go some way to explaining falling productivity, although I entirely agree your central point that pre crisis growth was illusory due to excess debt and it is pointless to make comparisons to pre crisis trends as they were not sustainable due to the arguments you have rehearsed earlier.

  • Anonymous

    Great post. Really I don’t understand why economists (Shaun excluded) don’t try to “back out” from their calculations the fake growth. We have “temporary” exclusions to make our deficit look plausible so if we can exclude the bailout money why not back that out of GDP estimates via revisions?

    It’s clear 1997 to 2008 was a complete fantasy of pulling forward demand.

    I’ll take your excellent analysis and then project forward. The UK can’t create genuine growth and will fail.

  • David Lilley

    I can’t handle compliments. I asked for negative comments to give me the opportunity to argue like Socraties. What else is there but argument? I want to be corrected and learn from debate.
    But thank you never-the-less. I also want to be read.
    On a different subject. 160,000 dead in Syria and 1,000 young men executed in Iraq. All I see is uneducated people who failed the test “just because man can ask a question like “is there as absolute being” does not mean there is an answer (Kant)”. Ask a silly question like “what is your favourite number and you get a silly answer like 7″. Die and you are dead just like the insect you trod on.

  • Anonymous

    Very well said. Any GB claim has to be taken with a mountain of salt, because he also claimed to have “ended boom and bust”

    But we could be doing much better now. UK runs a deficit. The unaccountable EC spending needs cutting & accountabilty or EC exit. Vast sums are wasted on agricultural subsidies, bank subsidies, grossly overpaid bureaucrats and qangos and excessive rent subsidies.

    With some creative destruction and some private sector style of chopping the deadwood from the public sector, and the UK could have a surplus and a very positive outlook. Also as I posted previously, creative options to build affordable homes for younger generations is essential. Affordable homes = higher standard of living.

  • therrawbuzzin

    Hi Shaun,
    The problem is,if they knew what they don’t know, there would be no mystery left, and a full explanation would have to be given, not just of what they don’t know, but the effects the “unknown” has on what they do know.
    As TPTB have an absolute disinterest in having to fully explain what they DO KNOW, let alone what might be thrown up by investigation of what they don’t, then it becomes clear (ahem) why they don’t want to know what they don’t know, as the unknown performs a very valuable function for them.

  • therrawbuzzin

    As I have previously posted, the two people whom I know, who have zero hours contracts, have them because they wouldn’t be able to claim means-tested benefits because of what their partners earn.

  • therrawbuzzin

    Ok. Yer a miserable sod. ;)

  • therrawbuzzin

    “When your foot is on the floorboards and the engine is screaming but the car is only crawling along you have to conclude that something is seriously wrong …”

  • Paul C

    Always a day late I am afraid but this day’s item pokes at the real issues behind the headlines. I suggest that we a living in an artifice economy using made-up money where assets appreciate regardless of their true underlying value (we all know that buildings depreciate without timely maintenance & updating).
    Productivity will of course plummet because capital & focus is mis-allocated in the new theatrical nature of the UK. Without a fair and market driven cost of money the cash is manipulated in all manner of perverse ways.
    I work in the 3rd sector, between Government and Charity, a large portion of all daily activities are spent on spinning the message, managing the flow of information, maintaining the staus quo and controlling the workforce. This is the new “productivity”, unfortunately is has no measureable value…..

  • Paul C

    I hear you, the state and banks share the same interest to maintain the status quo and “protect” homeowners/voters from themselves. Real production or output is a sideshow to the elephant in the room, the gross and extensive refocus towards bubble asset markets and their perpetuation.
    I am traditional in my thinking, without risky investment in new physical productive machiney and enterprise then our society and economy has little long term future. The current “modus operandi” actively avoids such behaviour.
    The Banks, the State and in coerscion the general public are drawn into a great theatre of disception. Talking about productivity is as Shaun alludes – a very 20th century pre-occupation.
    Paul C

  • Paul C

    Affordable homes for younger generations. I like that idea, is it something we could do only for them? I mean that would be OK to just make such things affordable to younger people alone, in an ageist approach. After all you could argue that only older people were afforded the opportunity to buy homes that cost £3,700 and 25 years later are worth £465,000. In a kind of ying and yang we could offer young people homes for £68,000 as long as they were under 25?
    What do you think?

  • Paul C

    I like your Morrison’s example. Having been brought up in the North, I enjoyed Morrisons near Bradford in the 1980′s before it went National. Indeed it was once a truly effiicent and low cost supermarket, your critical appraisal is one that recognises how “corporate thinking” can trash any well run little business by applying “common practices” ala Tesco and look what you get, unaccountable suits, all harvesting their own bonuses and pension payments. There is unproductivity everywhere, but the folk being told to “just do it” think it is a job…..

  • Anonymous

    Recently I suggested using a mutual structure to build blocks of flats in places like London. Alternate designs could compete for pre-registration and once a high level is achieved progress to off-plan sales, with deposits and buyers funding vetted.

    Sold off plan reduces risky finance and reduces barriers to entry. Sold off plan before starting construction prevents massive speculative build by highly leveraged developers. It prevents excessive unsold inventories. I don’t envisage any age restrictions, and restrictions on multi-property ownership can be debated. Adequate construction supply would reduce BTL yield – buyer beware. Equal tax on empty properties & second homes may discourage speculating investors.

    A friend in rural Germany bought a village building plot, 900m2 for 17,000 euro complete with road, electric, water and sewer infrastructure. Adequate housing supply helps affordability.

  • Anonymous

    Thanks for the link, Jim M. I liked the other song by the Amen Corner that you could listen to if you followed your link very much as well.

  • David Lilley

    Now that this post is history/archive I can speak one on one.
    Yours is a great post every time and I look forward to reading them all. I may some times seem to be contrary but that is because I just follow the argument and nothing else. I have learnt considerably from your posts.
    You have now introduced me to the GWA and I love it. You might call it the new Doomsday Book. When many were talking of the national debt being three or four times the quoted figure, due to off balance sheet PFI and public sector pensions liabilities, the GWA quantifies these and gives us a true picture.
    I agree with your above post but when Stephanie and others speak of hoarding labour they are thinking of the motor industry. But the motor industry reduced hours and the BofE Quartery Report is working on hours worked and therefore hoarding does not come into it. They didn’t pay workers to do nothing leading to a productivity decline. The BofEs consideration of labour being cheaper than capital investment is similarly misplaced.
    I thought that my explantion of the apparent productivity puzzle was sound and I would have liked your professional comment. I did A level economics but failed as I only had one horizon at the time, girls.
    I have forwarded my tentative explanation of the productivilty puzzle to Robert Peston and the authors of the BofE report but without feedback.
    Mortgage equity release of £400b alone was a greater stimulus than £375b of QE back in the dark days of the NICE decade.