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Covid changes here to stay says Bailey

The governor of the Bank of England believes investment in intellectual property will remain high even after the pandemic.

Andrew Bailey said people are “adaptive creatures”, so many changes that have come about because of the pandemic are unlikely to go away soon.

“We do see already evidence of a shift to labour-saving use of digital technology. Which in itself raises measured productivity growth,” he told onlookers at an Organisation for Economic Co-operation and Development conference.

“Probably the best example, certainly in the UK, of that is retailing. We saw a 10 percentage point increase in the share of online retailing last year.”

The previous 10-point increase took seven years, Mr Bailey added.

He said: “Investment in intellectual property products, things like software and research and development, (is) holding up better than other forms of investment.

“Now the big question – to which, of course, it’s too soon to provide any firm answer – is to what extent are these changes going to persist and further expand? My best guess, for what it’s worth, is that I think that to some considerable degree they will, because we are essentially all adaptive creatures.”

Evidence emerged on Friday that the UK’s bounce back from Covid-19 is slowing.

Figures from the Office for National Statistics showed that gross domestic product (GDP) only grew by 0.8% in May, from 2.3% in April.

Mr Bailey said innovation in the economy requires both success and failure. He pointed to the successful vaccines being rolled out across the world, but added that there were many attempts to develop a Covid-19 vaccine that did not work.