Once the acute phases of the financial and euro crises were over, it was clear that it would take time for advanced economies to recover. The history of past financial crises gave a clear warning that recovery would typically be long and painful.

Today, the scars are largely healed but growth is still slow. Before the crisis, any economist would have predicted that an economy with interest rates close to zero and no other major brakes on demand would see high growth rates and quickly overheat. Yet this is not what we have seen. The reason, I believe, must be found in mediocre medium term prospects, which in turn affect current demand and growth.

Estimates of long term potential growth in advanced countries have come down by 0.5 to 1 per cent since 2007. Some of the decline is due to ageing, some to lower productivity growth. The effect of an ageing population was largely predictable, and indeed largely predicted. (Whether it was taken into account by firms thinking about their investment plans is unclear.)