Quarterly Bulletin
Aggregate Supply Articles

Understanding investment better: insights from recent research (564k)
(By Ursel Baumann and Simon Price of the Bank's Structural Economic Analysis Division). Motivated by a number of puzzles about the recent behaviour of business investment in the United Kingdom (including the boom in the late 1990s and the prolonged weakness thereafter), this article brings together some of the main results of recent research on investment undertaken by the Bank and puts them into the wider context of the investment literature.

National saving (488k)
(By Simon Whitaker of the Bank's Structural Economic Analysis Division). The level of national saving is important for policymakers as it can contain information about future prospects for growth and inflation. This article starts by comparing the current level of saving with a simple benchmark. However, this benchmark ignores important issues such as the relevant measure of saving and capital and the ability to borrow from overseas. The article considers how various measurement issues and economic shocks could allow the level of saving to differ from this benchmark, and also looks at the outlook for national saving in the medium term.

The economic characteristics of immigrants and their impact on supply (638k)
(By Jumana Saleheen and Chris Shadforth of the Bank's External MPC Unit). Immigration to the United Kingdom has risen rapidly over the past decade, driven most recently by flows from the ten EU Accession countries. Monetary policy makers are interested in the impact of immigration on the macroeconomy and inflation. An increase in the number of immigrants, other things being equal, would raise the supply potential of the economy. But the extent to which potential supply increases will depend on the economic characteristics of immigrants. This article investigates the characteristics of immigrants, particularly new immigrants - those who have entered the United Kingdom in the past two years. It appears that new immigrants are more educated than both UK-born workers and previous immigrant waves, but are much more likely to be working in low-skilled occupations. The increasing share of new immigrants in low-skill, low-paid jobs seems to have led to the emergence of a gap between the wages of new immigrants and UK-born workers. The implications of these findings for overall productivity and the supply side of the economy are complex.