UK productivity plunges

Dec 24 2005 by Brian Amble Print This Article

Productivity growth in Britain described by Chancellor Gordon Brown as "the fundamental yardstick of economic performance"- has collapsed to its lowest level in 15 years.

Official figures from the Office for National Statistics (ONS) showed that output per worker grew by a mere by 0.4 per cent in the three months to September compared with a year ago, the lowest since the fourth quarter of 1990.

The alternative measure of productivity output per hour worked also made for grim reading, with hourly productivity unchanged in the third quarter of 2005 compared with the same quarter a year ago, down from 0.4 per cent growth in the previous quarter.

According to the ONS, the fall in annual productivity growth was due to the increase in whole economy employment more than offsetting an increase in output in other words, overall output was divided among more workers.

But manufacturing productivity grew by 1.2 per cent in the third quarter, up from growth of 0.9 per cent in the previous quarter. This rise was due to the increase in the growth rate of manufacturing output offsetting the increase in the growth rate of productivity jobs.

The figures emerged in the same week that China overtook Italy to become world's sixth-largest economy. If output for Hong Kong were also included in the figures, China would overtake Britain as the fourth largest economy.

According to the OECD, British productivity lags that of US, Germany and Italy by some 20 per cent, while the World Economic Forum places Britain as only the 13th most competitive economy due to an inadequately-educated workforce, excessive tax and government regulation and poor infrastructure.