Mark Carney: belief

Transcript context

…More than a decade, but again, people dispute exactly the nature of the facts here. Okay. I think there’s a few factors. I do think, broad brush — and I’ll give you four explanations. First is, a bigger aftermath of the financial crisis than in many jurisdictions, just access to capital and the starving of investment that came from that. Relatedly, from a statistical perspective, quite a lot of the productivity — as much as a third of the productivity in the run-up to the crisis — came from financial services, at least as productivity was measured. Basically, lending, the lending spread — I’m simplifying — counted as productivity. If you were in a credit boom, you were getting productivity. That’s one aspect. Second aspect is a managerial explanation that my colleague Andy Haldane did a lot of work on and has written extensively on, which is that there’s a longer tail of — if you look at productivity on a firm basis, the tails have lengthened and fattened. There’s less of a diffusion of productivity and, obviously, economies of scope and scale that are also concentrated in those larger firms. Then the third thing — and there’s different views on this; I think the numbers are pretty clear — is from 2016 to 2020, from the Brexit referendum until Brexit, a period of pretty intense uncertainty and basically a flatlining of investment over that period. It’s hard to grow productivity as fast if you’re not investing. Now, you’ve been a well-known critic of Brexit, and I was myself pro-Remain. But when you watch the handling of the pandemic, especially the vaccines, the EU doing such a bad job on procurement, do you have second thoughts and think, as I do, maybe Brexit wasn’t so terrible after all?…

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