A solution to Britain’s productivity problems could be on the horizon

The UK economy suffers from low productivity. Productivity measures output per person, or per time worked. If productivity was higher across the economy then people could work less, or be paid more, or both. Productivity drives an economy’s output and thus its potential growth rate and, in turn, living standards. So low productivity economies find to hard to keep up with high productive ones.

This is not a new problem. Ahead of the financial crisis the UK was making progress in closing the productivity gap that existed with major competitors such as the US. Since the crisis, though, all western economies have suffered. At various times over the last decade this has been called a problem, a puzzle or a challenge. However it has been described, UK policy makers have not been able to provide solutions.

This may be able to change. A welcome new report from the Centre for Social Justice, ‘Productivity: the Great British Breakthrough’, chaired by Iain Duncan Smith, has provided a fresh perspective.