UK productivity in the third quarter of 2022 was barely higher than in the year before the Covid-19 pandemic began, according to official data that will add to worries about the country’s economic prospects.
Output per hour worked – a key measure of labor productivity – was 1.6 per cent higher in the three months to September than the average for 2019, and just 0.1 per cent higher in the last quarter, the Office for National Statistics said. on Thursday. Output per worker was 0.5 percent higher than the 2019 average.
This means that despite major changes in working practices triggered by the coronavirus lockdown, there has been no change in the snail’s pace of growth seen in UK productivity since the global financial crisis.
This stagnation appears to be one of the biggest challenges facing the British economy, because productivity increases – workers who produce more for a given level of input – are the essential basis if wages and living standards are to rise without causing higher inflation.
ONS figures show that the biggest productivity gains across the economy came from public services, where output per hour worked remained 7.4 per cent below pre-coronavirus levels.
This may reflect the ongoing crisis in the NHS, where increases in funding and staffing since the pre-pandemic era have not led to an increase in the number of patients being treated.
The latest figures will inform the next official forecast from the Office for Budget Responsibility, the fiscal watchdog, which in October took a more optimistic view than other forecasters of Britain’s productivity performance. The OBR has told the Treasury that when it publishes its next forecast, alongside the March Budget, it expects to reduce its forecast for UK gross domestic product in 2027-28 by 0.5 per cent compared to last year’s Autumn Statement.
Poor productivity growth is one of the main reasons why UK average incomes have fallen behind many other rich economies in recent years.
Earlier this month, the ONS published figures comparing productivity performance across the G7 which showed output per worker, a more reliable cross-country measure than output per hour worked, was higher in every other country (except Japan, where no figures are available). in 2021 than in the UK. In the US, it is almost 50 percent higher and the UK lags behind the G7 average by 16 percent.