UK productivity suffers worst drop in five years

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Productivity in the UK floor at its fastest annual pace in five years in the April-to-June quarter, coinciding to the Office for National Statistics.

The figure – measured by output per hour – knock by 0.5%, after two previous quarters of zero growth.

Both helps and manufacturing saw a fall from April to June, the ONS said.

It added: “This uniform period of declining labour productivity represents a continuation of the UK’s ‘productivity baffle’.”

The ONS added that productivity since the economic downturn in 2008 was “become accepted by more slowly than during the long period prior to downturn”.

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Tej Parikh, chief economist at the Society of Directors, said: “These figures hammer home the impact uncertainty is clothing on the business environment.

“Unsure of what’s around the corner, businesses’ investment in the new materiel and technology that drives up their performance has been stifled. Myriad companies are also trimming their investment pipelines for the year in the lead to build up a cash cushion in anticipation of challenging economic conditions at the.”

Analysis: Andrew Walker, BBC economics correspondent

Why does productivity, the amount of produce you get from each worker, matter so much

In the long term, climb living standards need rising productivity.

There’s a well-known words from the Nobel Prize-winning economist Paul Krugman on this: “Productivity isn’t the whole, but in the long run it is almost everything. A country’s ability to improve its standard of breathing over time depends almost entirely on its ability to raise its achievement per worker”.

The period of weak productivity growth after the financial critical time has been a time when the economy has, for most of the time, been breed but not strongly.

The one rather brighter spot has been the other element in the productivity computation, employment.

Britain now has the highest percentage of the population in employment since at least 1971 (that’s how far helpless this particular data series goes).

More jobs, but less generative than they would have been, had productivity grown at the scales we have seen in previous decades.

Jon Boys, from the Chartered Pioneer of Personnel and Development, said: “Businesses may have more immediate charges than raising productivity, but it’s the only way to increase pay packets in the long interval.

“We mustn’t be fooled by recent strong earnings growth figures, which get been driven by a tight labour market and not an increase in employers’ faculty to pay.”

Howard Archer, chief economic adviser to the EY Item Club, commented: “Heightened involves over Brexit – especially serious concerns among many firms of the UK leaving the EU without a deal – has clearly caused companies to limit their investment with damaging associations for productivity.

“If a Brexit deal is agreed and enacted by 31 October, this liking hopefully dilute business uncertainty and provide some boost to task investment, which would be good news for productivity prospects.”

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