Giving evidence to the Treasury Select Committee this afternoon, Bank of England Governor Andrew Bailey doubled down on a point he has previously made to the committee: the economy is being pulled down by an extraordinary fall in productivity in the public sector. Relative to 2019, he said, productivity across the public sector is now 8 to 9 per cent lower. In the health sector, it is 17 to 18 per cent lower. In what he described as a ‘back of the envelope calculation’ the overall effect has been to reduce GDP by between 1 and 3 per cent.
Last year, Bailey added, something extremely unusual happened: UK productivity fell without there being a recession.
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