is harder for policy to boost productivity and growth. the second half of the 20th century, the median level of gdp per capita was 15 % below the level predicted from the trend of the ten years prior to the crisis, which is roughly where the uk is currently. see reinhart, c. m., and v. r. reinhart “ financial crises, development, and growth : a long - term perspective ”, the world bank economic review. refers to forecasts made for the first year after the april imf weo in question ; for example the april 2010 weo forecast for 2011 relative to the final outturn data. bis central bankers ’ speeches in these secular stagnation views of the world, the water around us was getting colder before the crisis and has become colder since. but we have not noticed it. and it is this, rather than the slowness of the healing process and the aftershocks of the crisis, that explains the serial disappointments in economic growth. i have set this out as two very different stories about what is happening – “ slow healing ” and “ secular stagnation ”. of course, given enough unfortunate events and enough repeated disappointment on the pace of recovery, they could look and feel the same for a long time. there is much that is common to them. in both stories for a period of time, productivity is lower, interest rates stay low for long and pay and income growth is weak. but these effects are longer - lived in a secular stagnation world. it is quite possible that we are in some combination of both worlds. but i think it is important, especially when thinking about policy, to distinguish the different forces that drive these respective stories about the world. the uk picture which brings me to the uk. when i joined the mpc over two years ago, the data seemed to point quite firmly towards the healing story. the uk was experiencing a burst of growth, driven by the return of credit and confidence and pent - up demand from the recession and slow recovery. many commentators were arguing that the bank was in danger of getting behind the curve ; these arguments grew louder as unemployment fell at its fastest rate for 40 years. the bank ’ s forecasts two years ago suggested that growth would fall back a touch, but only a touch, to around its pre - crisis average of 0. 7 % per quarter. our forecast for growth in 2014, 15, 16 was 3. 4 %, 2. 7 %

and 2. 9 % respectively. the reality has confirmed part but only part of that story. over the course of 2014 and 2015 growth drifted down, slowly but consistently and by more than forecast. the economy grew at around 2 % annualised in the last quarter of 2015 – around 0. 7 percentage points lower than the february 2014 forecast ; growth in 2015 was 0. 2 percentage points lower. the bank ’ s most recent forecast is for growth to pick up slowly over the next few years to 2. 5 %. that is less than the average growth rate of nearly 3 % in the decade before the crisis but around the average growth rate in the last 60 years. it will, according to the oecd, be the fastest growth rate among g7 economies this year. over the period, inflation has been pushed down to around zero by the strength of sterling and by the very sharp fall in the oil price. i hesitate to describe the oil price fall as an “ unfortunate event ”. much of the fall is the result of an increase of supply, the product of the oil investment cycle that accompanied oil prices staying at over $ 100 per barrel for much of the last ten years. that will have boosted consumption and supported growth in oil - consuming countries like the uk. but the speed and size of the fall has made the shock to inflation very abrupt and exposed weaknesses in oil - producing economies. and more worryingly some of the fall over the last 18 months has been due not to an increase in supply but rather to slowing demand in emerging markets especially china. this will have had an adverse effect on world growth. there are continued signs of strength in the uk economy. consumer confidence is near record levels and business investment intentions are strong. housing market transactions and investment are picking up. credit has picked up and is growing around the rate of gdp. on pre - crisis metrics, there are signs of tightening in the labour market. unemployment is now at 5. 1 % – its lowest level since 2006. job - to - job flows have picked up sharply and are nearly at pre - crisis levels and the vacancy to unemployment ratio – a measure of labour - market tightness – is at its highest level since 2005. but, some things have still not improved as we had hoped. despite being stronger in the middle of 2015, pay growth has now fallen back to the 2 % range – roughly its average since the crisis. and forward - looking surveys do not suggest any significant recovery in pay growth is