Productivity data published for 2014 by the Office for National Statistics (ONS) puts the UK economy output per hour 20 percent below the average of the rest of the G7 advanced economies.

The ONS says that UK output per worker was also 20 percent below the rest of the G7.

The UK's "productivity gap" of about 18% compares with a gap of about 7% for the rest of the G7” says the ONS.

Looking at current price productivity per hour worked, the UK came below all the other G7 countries bar Japan.

On a constant price basis The UK fared worse than all the other G7 nations except Italy.

Current price GDP per hour worked

Productivity v GDP

Constant price GDP per hour worked

Productivity G7

TUC General Secretary Frances O’Grady said:

Without a step change in productivity growth, the UK economy will struggle to deliver secure jobs and higher living standards.

“We need a better economic plan focused on higher public investment in modern infrastructure and workforce skills. A new round of severe public service cuts and pay freezes will keep the UK in the slow lane.

James Sproule, Chief Economist at the Institute of Directors, said:

It is not surprising to see that the UK continues to lag our G7 competitors in terms of productivity. There is, however, a significant silver lining to the structure of our economy. Britain has struck a balance between an open, competitive economy and a sensible level of employment regulation which should be the envy of Europe. We have high employment, strong wage growth and a level of flexibility which encourages entrepreneurship and innovation.

“The United States, which has embraced agile markets, shows the potential of free and open economies to boost productivity. While we would not – and could not – replicate every element of the US economy, there are lessons Britain can learn. A closer collaboration between universities, businesses and investors, and a warmer embrace of equity finance for instance, will help create the knowledge-intensive, risk-taking and entrepreneurial businesses which will drive productivity gains.

“In the era of major technological change, we should arguably be focusing more on ‘agility’ than ‘productivity’. The firms which are most productive are often the biggest, with deep specialisation in niche areas that have considerable economies of scale. But the economy of the future looks set to be dominated not by big companies, but by fast, agile, quick-moving and reactive ones. The firms that can respond to consumer demands most effectively and bring new products and services to market will reap the rewards.”

The IoD says it will be releasing a new report into the UK’s “productivity puzzle” at this year’s IoD Annual Convention on 6 October

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