BoE: output unlikely to return to trend

The Bank of England has followed my practice of drawing its forecasts as levels of output not as changes. Here is its picture, showing it does not expect the British economy to get back to its previous trend in the forecasting horizon. But it is being less than explicit in quantifying how much of that lost output is gone for good.

“Despite the recovery in economic growth, output is very unlikely to return to a level consistent with a continuation of its pre-crisis trend for a considerable period. That reflects in large part the substantial impact of the downturn on the supply capacity of the economy, but also the sustained weakness of demand relative to that capacity.”

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