Burton Mills - UK Productivity Rises

Economic productivity reached its highest rate in the last two quarters of last year but Burton Mills economists say the trend is not likely to last.

Burton Mills analysts say the UK posted its most robust productivity growth in more than ten years during the last two quarters of last year. These results were helped by stronger growth from October to December. Burton Mills economists say the expansion was unlikely to be a turning point for Britain’s economy which has long suffered from weakening growth in productivity.

Burton Mills economists say growth in productivity in many developed economies has been weak since the financial crisis a decade ago. In the UK it has been particularly poor with less than 2 percent growth in total since 2008. This lack of expansion has had a negative impact on wage growth.

Last week, data released by the Office for National Statistics revealed a significant improvement from the previous trend.

Economic productivity per hour of work increased by 0.7 percent in the final quarter of last year, higher than the long-term average but slightly less than originally estimated in February while growth for the third quarter was upwardly revised to 1.0 percent. Burton Mills economists say the last two quarters of last year showed the most robust growth since the last six months of 2005.

Burton Mills economists noted that, due to a sharp drop in the number of hours worked, the increase in the rate of growth may have been temporary and that the improvement may not be sustainable in the long run.

The United Kingdom’s economic productivity is comparable to that of Canada but lags behind the US, France, and Germany by approximately 25 percent.

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Source: Burton Mills