Tag Archives: investment

Is finance a powerful driver of growth?

Saleem Bahaj, Iren Levina and Jumana Saleheen.

Since the financial crisis the UK has experienced a period of weak productivity growth, weak investment coupled with a decline in credit to non-financial sectors of the economy.  But there is debate about the direction of causality: did low growth and other structural factors mean firms and households wanted to borrow less – as argued by Martin Wolf?  Or did the financial sector offer too few funds to the real economy in the wake of the crisis as banks tried to repair their balance sheets. Alternatively, the financial system may not be functioning properly in general, if much of the financial sector’s activity contributes little to the betterment of lives and efficiency of business – a point made by John Kay.

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Filed under Banking, Financial Markets, Macroeconomics, New Methodologies

The impact of e-commerce on the consumer sector- view from a Bank of England Agent

Tim Pike.

The internet’s share of UK retail sales is – at 12% – the highest in the developed world.   In my daily conversations with businesses and services, I find that some sectors are responding much more nimbly to the competition from internet retailers than others.  In this blog I argue that the growing share of internet retailing is likely to reduce business investment, especially in buildings, but the additional capacity associated with internet retailing is likely to be a drag on retailers’ profitability that may last for many years.  In my view the long-term effect on capital productivity should be positive, but the effects on labour productivity are less obvious and may be adverse.

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Filed under Macroeconomics