For many of us in the UK, work is just not working. Productivity, the measure of economic output per hour worked, is almost 40 per cent below the US, and 20 per cent below other major economies such as France and Germany.
The latest figures published this week by the Office for National Statistics show the UK productivity gap is not likely to improve anytime soon. Just three out of the 18 industries that make up the UK private sector economy registered gains in the official data. Productivity levels have been falling since 2023.
What is behind the UK “productivity puzzle”? According to Chris Giles, writing in his column this week, the prime driver in the declining growth rate since 2008 has been that the sectors which were once the best-performing — such as advanced manufacturing, professional services, finance and London’s economy — are no longer pulling away from the rest of the UK.
Economists also cite lack of investment in human capital — including skills and development — as a key driver for low productivity. Another 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 down to a fall in “business dynamism”.
What do you think? What is the main reason behind the UK’s enduring productivity gap? Tell us your views by voting in our poll or commenting below the line.
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