Our productivity puzzle

British productivity has rarely been so talked about, because seldom has its growth been weaker. This simple statistic — the amount of output we each deliver per hour worked — is provoking complex debate. For five decades before the economic downturn, the average output for each UK employee rose by around 2 per cent per year. Irrespective of the short-term economic weather, through oil crises, spikes in inflation, or periods of boom or recession, over the long-term workers’ productivity continued to rise. With it came growth in GDP, earnings and living standards. At the end of 2007, the ratio of output to hours worked — labour productivity — was 50 per cent higher than when Margaret Thatcher left office.

In contrast, the productivity record since the economic downturn is bleak. Following the high-water mark at the end of 2007, UK productivity fell and endured its slowest recovery since the second world war.