was fixed at £3. 83 / oz. deflation was commonplace. discoveries of gold occurred only intermittently, and because the global economy – and therefore the demand for currency – was generally expanding, its real price often came under upward pressure. with the nominal price fixed, the only way that could happen is if the denominator of that real price – the price of goods and services – declined. thus uk consumer prices fell significantly during the 1840s, for example, and again in the late 1850s ; they also fell through the 1880s ( chart 2 ). and although real pay tended to grow over time, these deflations were sometimes severe enough to mean that nominal wages declined. chart 2 deflations common during gold standard source : ons and hills, thomas, dimsdale ( 2010 ). however, there ’ s no evidence this had an especially severe effect on the economy. to be sure, lower inflation was associated with weaker gdp growth, lower wage growth with higher unemployment ( charts 3 and 4 ). but there doesn ’ t look to be anything particularly bad about negative inflation : as far as one can tell, the economic cost of moving from of zero to – 1 % ( say ), whether in price or wage space, wasn ’ t any worse than that involved in going from 5 % to 4 % ( for example 5 ). one reason for this may be that people were adapted to the regime – they were used to the idea that prices, and even nominal wages, occasionally declined, and because these things were therefore more flexible, it didn ’ t take an especially severe recession to get that to happen. the lower bound for nominal interest rates may be relevant in this context too : in the united states wage growth averaged - 13 % between 1929 and 1932 and, by the time that deflation got going, it would have been impossible to cut interest rates to those sorts of levels. this led to dramatic rises in the burden of debt and rates of default. if deflations per se were costly you ’ d expect to see charts 3 and 4 become shallower south of the origin. bis central bankers ’ speeches chart 3 those deflations no more costly than other disinflations … chart 4 … same was true for wage growth source : ons and hills, thomas, dimsdale ( 2010 ). source : ons and hills, thomas, dimsdale ( 2010 ). chart 5 interest rate unconstrained by zero bound but what must also have been important,

in excess of 90 % – now have internet access. but the uk ranks poorly compared to other oecd countries in terms of broadband penetration ( chart 9 ). that is true not only for standard broadband connectivity, but also for more advanced infrastructure such as optical fibre connections. those low rates of penetration largely reflect large / small firms differences. as with other oecd countries, broadband usage by large firms is almost 100 %. but for smaller firms that falls to 93 %. similarly, the share of uk businesses with a website is above the oecd average, at around 83 %. but that masks sizable large / small firm differences. almost 100 % of uk large firms use websites, which has been the case for a decade. only two - thirds of small firms had a website in 2007. one may have expected that gap to close rapidly. even today, however, only around four - fifths of small firms have a website. e - commerce is another technology that has arguably been surprisingly slow to propagate through the uk economy. in 2016, over 80 % of uk individuals ordered goods or services online, more than any other oecd country. one may have expected that to have been mirrored by a large share of uk businesses selling online. in practice, the uk is only marginally above the oecd average. and between 2009 and 2016, the share of uk businesses making e - commerce sales increased by only 6pp, from 17 % to 23 %. swinney ( 2018 ), giles ( 2018 ). schneider ( 2018 ). haldane ( 2017 ), jacobs et al ( 2017 ), swinney ( 2018 ), for instance. oecd data. all speeches are available online at www. bankofengland. co. uk / speeches if the story, then, is one of diffusion dynamics being more sluggish in the uk than elsewhere, what might be done to improve matters? institutions, and within that universities, may well have a role to play. at present, a relatively small sub - set of the uk ’ s universities operate as innovation hubs. they conduct world - leading research using world - leading researchers. and, in an increasing number of cases, they are doing so in tandem with businesses in spin - off science parks, acting as incubators of innovation. what the uk may lack is some diffusion spokes to accompany these innovation hubs – spokes that could help spread new and existing technologies,