makers ’ panel, around 40 % of firms consistently identify brexit as a major source of uncertainty, with less than 20 % viewing it as unimportant ( chart 5 ). bank staff analysis of the results points to a drag of between 3 and 4 % on nominal investment growth since the referendum as a result of this uncertainty. for more detail on these mechanisms, see the box on “ factors affecting the prospects for long - term supply following the eu referendum ” on pages 29 - 30 of the august inflation report. it is also possible that actual or anticipated changes in institutional arrangements due to brexit might affect the outlook for net migration and therefore population growth. specifically, it has been at the top of the list for two years, falling back for the first time to second place in q1, with its place at the top taken by weak uk demand. for more information on the decision maker panel, see bloom, n. et al ( 2017 ), “ tracking the views of british businesses : evidence from the decision maker panel ”, bank of england quarterly bulletin, 2017q2. the bank ’ s 2018q1 agents ’ summary of business conditions includes the latest published results from the survey. all speeches are available online at www. bankofengland. co. uk / speeches chart 5 : brexit as a source of uncertainty aug - sep 2016 feb - apr 2017 aug - oct 2017 feb - apr 2018 share of respondents ( per cent ) not important one of many sources 2 or 3 top sources top source of uncertainty on the demand side, while brexit did not lead to an immediate fall in gdp, it is nonetheless exerting a drag. in addition to its effects on investment, it has had a significant impact on real household incomes and therefore on consumption. the main vehicle for this impact has been the fall in the exchange rate, which remains some 15 % below its pre - referendum peak. the rise in import prices caused by sterling ’ s depreciation has had a material and persistent effect on incomes : real household income has only risen by 0. 2 % in the seven quarters since the referendum, compared with averaged growth of over 1½ % per year in the five years prior to it ( chart 6 ). given that slowing in real income growth, you could argue that it ’ s surprising that households haven ’ t adjusted consumption even more. consumption growth has certainly slowed : it has averaged around 0. 3 % per quarter since the referendum, compared to

www. bankofengland. co. uk / speeches the labour market i said at the start of this speech that wage growth has been surprisingly weak. that wasn ’ t a figure of speech. this chart ( chart 8 ) shows the mpc ’ s wage growth forecasts from the past few years against the actual data. as you can see, the mpc have been consistently surprised by the continued weakness of wage growth. chart 8 : mpc wage forecasts total pay growth, per cent february 2014 february 2015 february 2016 february 2017 february 2018 may 2018 - 1 why have wages been so persistently weak? one reason is weak productivity growth. how much companies are prepared to pay their workers depends ultimately on how much those workers are able to produce. weaker productivity has meant weaker wage growth. but wages were weak even relative to productivity. statistical models that take account of the effects of slack and productivity struggled to explain the full extent of the weakness in wages. “ missing wage inflation ” and the question of whether the phillips curve was dead became a hot topic among economists. as with the productivity puzzle itself, there are a wide range of candidate explanations for this “ wage puzzle ”. i won ’ t go through the full list now. but i do just want to mention three that i find relevant. one candidate explanation is that there may be lags between unemployment falling and wage growth starting to pick up. that might be the case for instance if wage expectations take time to adjust to a tighter labour market – any lasting effect of the post - crisis downward nominal wage rigidity should have worn off, but could re - emerge if 2 % wage inflation has become accepted as more typical following the financial crisis. or it all speeches are available online at www. bankofengland. co. uk / speeches might be that pay initially only rises for workers moving jobs, and that pay for workers staying in the same job doesn ’ t pick up until the stock of unemployment workers is used up. that would be consistent the fact that pay growth for “ switchers ” has recovered by much more than pay growth for “ stayers ” ( chart 9 ). in the more recent period it might be that this is another effect of brexit : as i argued last autumn, workers might have responded to uncertainties about the outlook by showing even more flexibility in their wage demands, or employers might be acting in a more precautionary way. chart 9 : pay growth for “ switchers ” and “ stay