Productivity in the UK private sector dropped below pre-pandemic and pre-financial crisis levels last year, highlighting the challenge facing chancellor Rachel Reeves as she seeks to boost lacklustre economic growth.
Total factor productivity in the market sector — a measure of how efficiently resources are used in the economy, excluding government — fell 0.6 per cent in 2024 compared with a year earlier, the Office for National Statistics said on Friday.
Productivity was 0.7 per cent below its level in 2019, before the Covid-19 pandemic, and 1.2 per cent down on 2007, before the global financial crisis, the statistics agency said.
Friday’s data was labelled “official statistics in development”, like many official indicators.
The poor performance contrasts with growth in private sector productivity of about 1.8 per cent a year in the decade before the economic downturn that followed the global financial crash, the ONS added.
The Bank of England has raised concerns about the UK’s weak productivity performance, which has implications for economic growth and inflation.
Since winning power last July, Sir Keir Starmer’s government has made growing the economy its top priority as part of an effort to improve living standards and the public finances.
Analysts have warned that the Office for Budget Responsibility, the fiscal watchdog, could downgrade its forecasts for UK productivity growth, which for several years have been more optimistic than other forecasts.
Any downgrade would deal a further blow to the straitened public finances.
The so-called productivity puzzle saw levels decline across the world in the wake of the 2008 financial downturn, but it “has affected the UK to a greater extent than other advanced economies”, the ONS said.
