Fag break Britain: four answers to Britain's productivity puzzle

Jobs are being created in Britain, but the economy isn’t growing. In the last year, the number of people in work rose by 2 per cent, but economic output rose by just 0.3 per cent. As the below graph shows, employment is now 0.7 per cent above its pre-recession peak, whereas GDP is still 3 per cent below it.

This adds up to a big drop in productivity. Output per worker is now 3.8 per cent below its 2008 Q1 level, and 13.3 per cent lower than it would be if the pre-recession trend had continued.

In a piece for this week’s issue, The Spectator’s business editor Martin Vander Weyer points out that this slump is ‘the equivalent of an extra five-minute fag break outside the fire exit for every employee, every hour’. (On the latest figures, it’s more like an eight-minute break.) So why has it happened? Martin examines the various factors contributing to what has become known as the ‘productivity puzzle’: