What is holding back UK productivity? Lessons from decades of measurement

UK labour productivity is significantly lower than that of many other similarly advanced economies and has been so for decades, with negative implications for UK living standards. To make matters worse, during the last ten years labour productivity growth has stalled in most industrialised countries, and particularly in the UK. This has led to a renewed policy focus on productivity growth, as evidenced by successive government productivity plans and efforts to re-invigorate industrial strategy.

Accounting for UK economic performance 1973-2009

Economic performance in the UK improved over 1997 and 2007 in comparison to other OECD countries. We employ growth accounting and crossÐcountry regression analysis to identify factors behind this relative improvement in performance. Based on growth accounting analysis, we find out that, capital deepening and skills improvements, as well as financial services constitute a small part of the improvement in hourly productivity performance. The majority of the improvement comes from factors affecting the level of technology and the efficiency of factor use.