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For a lot of us within the UK, work is just not working. Productivity, the measure of economic output per hour worked, is sort of 40 per cent below the US, and 20 per cent below other major economies equivalent to France and Germany.
The newest figures published this week by the Office for National Statistics show the UK productivity gap isn’t prone to improve anytime soon. Just three out of the 18 industries that make up the UK private sector economy registered gains within the official data. Productivity levels have been falling since 2023.
What’s behind the UK “productivity puzzle”? In accordance with Chris Giles, writing in his column this week, the prime driver within the declining growth rate since 2008 has been that the sectors which were once the best-performing — equivalent to advanced manufacturing, skilled services, finance and London’s economy — are not any longer pulling away from the remaining of the UK.
Economists also cite lack of investment in human capital — including skills and development — as a key driver for low productivity. One other factor is the UK’s relatively low investment in research and development, which in turn fuels lower levels of patenting and economic innovation.
The Competition and Markets Authority puts it right down to a fall in “business dynamism”.
What do you think that? What’s the major reason behind the UK’s enduring productivity gap? Tell us your views by voting in our poll or commenting below the road.
