The Briefing Room Why does the UK have a problem with productivity?
Nov 13, 2025
Chris Giles, an economics commentator at the Financial Times, sheds light on productivity measurement. Helen Miller from the Institute for Fiscal Studies reveals how underinvestment and historical shocks impact growth. Duncan Weldon, an economist, discusses the long-term effects of crises and the potential of AI in productivity, while Greg Thwaites from the Resolution Foundation highlights regional disparities and the need for innovative firms to thrive. Together, they explore ways to revitalize the UK's productivity landscape.
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Productivity Is The Core Growth Engine
- Productivity measures output per unit of input, usually value added per hour worked or per worker.
- It drives long-run living standards and government tax revenues, so small forecast changes matter a lot.
UK Lags Comparable Economies
- The UK lags peers on labour productivity: roughly 80% of the US and below Germany and France.
- The UK caught up until 2007 but has since fallen back, underperforming major economies.
Multiple Shocks Have Dragged Growth Down
- A string of major shocks (2008 crisis, Brexit, pandemic, energy shock) has depressed UK productivity.
- Crises weaken banking, reduce investment and add trade frictions that slow productivity growth.