The UKs Productivity Puzzle

Slow productivity growth is one of the biggest topics shaping current economic discourse.

It is hard to overstate the importance of productivity in driving improvements in living standards. Since 1850, UK GDP per head has risen 20-fold, transforming our standards of living. If productivity had remained flat over that period, GDP per head would only have doubled.

UK labour productivity rose at around 2% a year from the seventies but has stagnated since the financial crisis. British productivity now remains only slightly higher than its pre-crisis peak at the end of 2007.

While weak productivity is a global phenomenon, international comparisons suggest that it is a particularly acute problem for the UK. For example, British workers are less productive than the French by a third. As a result, the average French worker could stop work on Thursday afternoon and still produce as much as the average British labourer does in a week.