There has been a sharp rise in UK productivity – long blamed for holding back the country’s economic growth.
According to figures from the Office for National Statistics (ONS), growth in labour productivity hit a six-year high in the third quarter of last year – rising 0.9% following falls over the first six months.
The data showed the fightback was driven by the manufacturing and services sectors, which both recorded increases of 1% compared with the previous three months.
The ONS tempered the improvement by saying that productivity growth remains at its lowest levels since the 1820s on a rolling 10-year basis.
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Nevertheless, the figures will provide some cheer for the Chancellor, who is desperate to restore output levels in the UK as they continue to stubbornly lag the country’s main competitors in Europe – particularly France and Germany.
Britain ranks fifth out of G7 industrial nations on productivity – the amount of work produced either per worker or per hour worked.
The Government has put its Industrial Strategy at the heart of its turnaround efforts – with economic growth slowing amid uncertainty over Brexit.
Philip Hammond suffered a blow in the autumn Budget when the Office for Budget Responsibility downgraded its growth forecasts for the next five years because of historic weak productivity.
But Howard Archer, EY ITEM Club’s chief economic adviser, said there were indications 2017’s statistics could end on an unexpected high.
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He said: “The marked third-quarter rebound suggests that some of the first-half 2017 weakness in productivity may have been cyclical.
“Businesses may have been keen to employ given concerns over potential labour shortages and also given the low cost of labour (particularly relative to capital).”
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Ian Brinkley, acting chief economist at the Chartered Institute of Personnel and Development, said it was too soon to start celebrating as “giant leaps” were needed.
“The UK’s productivity remains well below pre-crash levels and with Brexit around the corner, unless a more concerted effort is made to improve productivity, we won’t be in a strong enough position to compete once we leave the EU.”
Source: Sky News