MNI BRIEF: BOE Bailey - AI A Way Out Of UK's Low Productivity

Bank of England Governor Andrew Bailey on Monday highlighted the weakness of UK productivity growth and labour supply in a speech at Leicester University, without addressing current monetary policy.

Bailey noted that average annual potential gowth fell from 2.6% in the pre-financial crisis period to 1.3%  in the decade up to 2019 and to just 0.7% since 2020, with an ageing population entailing that there is a more pressing need to raise the workforce's productivity. He said artificial intelligence was the most likely new, broad based technology that could drive productivity higher. (see MNI INTERVIEW: UK's OBR To Cut Productivity Only Slightly-Bean )

The BOE Governor also noted the role of trade in boosting growth - making the case the persistent imbalances, such as China persistent trade surpluses, should be addressed by boosting domestic demand and through mulilateral forums rather than bilateral deals, noting the need for "effective multilateral processes that support getting us to more balanced outcomes," he said.