LONDON: Britain’s economic productivity is starting to show signs of sustained improvement, economists say, potentially marking the end of a prolonged slump that began around the 2008 financial crisis and appeared to worsen after the Covid-19 pandemic.
Rising productivity – or the amount of economic output generated per hour worked – is key to higher living standards and offsetting some of the fiscal headwinds from Britain’s ageing population and growing defence spending.
Estimates from the Resolution Foundation think tank, published yesterday, showed that annual growth in output per hour had risen to an average of 1.1% over the two years to end-June, up from an annual decline of 0.7% in the two previous years and an average rise of 0.7% in the late 2010s.
“While official figures suggest that the output of workers has worsened further in the mid-2020s, our more accurate productivity measure suggests that it has been improving in recent years,” said Simon Pittaway, an economist with the Resolution Foundation.
Until recently, the Office for National Statistics’ main productivity measure was based on a workers’ survey that suffered from a big fall in response rates after the pandemic.
In June, it instead recommended using tax data, which gives more reliable employee numbers but lacks detail on hours worked and self-employment.
Economists have come up with their own estimates of productivity growth.
Bruna Skarica, chief UK economist at Morgan Stanley, believes private-sector productivity growth has risen to 1.8% a year – close to the pace seen before the global financial crisis.
“We are seeing similar trends as we saw in the United States,” she said, but added that the US improvement began roughly a year earlier than Britain’s.
In the United States, productivity growth picked up after the pandemic and has been strong for about three years. — Reuters
