In response to the question: “Does trade with other countries lead to job creation in (survey country), job losses, or does it not make a difference?”, 67% in China answered “job creation”. In the US, only 20% responded in this way, and 50% responded “job losses”. See http://www.pewglobal.org/question-search/?qid=1890&cntIDs=&stdIDs= xviii YouGov (2015). See https://yougov.co.uk/news/2015/10/13/public-split-globalisation/. xix Haldane, A. (2015), “Labour’s share”, speech given at the Trades Union Conference, 12 November. xx This uses the economic policy uncertainty indices developed by Baker, S, Bloom, N and Davis, S (2015), “Measuring economic policy uncertainty”, NBER Working Paper No. 21633, October. Refers to 12-month trailing averages. xxi A range of factors can explain these trends including, recently, investors’ increasing aversion to disaster risk and desire to hold safe assets – like bonds – instead of risky ones – like equities. These other factors include the nature of the monetary policy regime, and the types of macroeconomic disturbance responsible for macroeconomic fluctuations. For example, commodity price shocks in the 1970s led to inflationary recessions, causing nominal bond prices to fall as inflation expectations rose, and equity prices to fall as the economy slowed. Improvements in the anti-inflation credibility of central banks, by contrast, reduced inflation risk premia in nominal bonds, raising their prices and lowering yields, while achieving such disinflation required temporary reductions in growth, lowering equity prices. Finally, demand shocks, which tend to create disinflationary recessions and inflationary upswings, tend also to generate negative co-movement between nominal bond prices and equity prices.

These include the rise of global trade and value chains which offer access to lower-cost inputs, lowering the price of final imported goods and services 8; demographic trends which have added to the economy’s labour supply, lowering wage costs 9; and increased automation and flexibility in the jobs market holding down wage growth and potentially flattening Phillips curves.10 Chart 7: UK GDP after the Great Depression and Great Recession  50 Cumulative percent change 40 30 20 10 0  Years 0  -10  t+1 t+2 t+3 t+4 t+5 t+6 t+7 t+8 t+9 t+10 t+11 t+12 The Great Depression  The Great Recession  Source: ONS and Bank calculations. These structural factors would, in theory, be expected to cause a downward shift in the price level rather than in the rate of inflation. But because these factors have played out over a lengthy period, they may have shown up in a persistent drag on measured inflation rates. For example, Faijgelbaum and Khandelwal (2016) estimate that global trade integration has lowered the price of the typical household consumption basket by between a quarter and two-thirds – a huge effect. This subdued pattern for global inflation, driven by demand and supply-side factors, has occurred against a backdrop of global monetary policies remaining highly accommodative, itself in part a response to these disinflationary forces. For example, in the aftermath of the global financial crisis, central banks lowered  8  Johnson (2018). Goodhart and Pradhan (2020). 10 Haldane (2018).