Productivity problem in UK is back

london — British productivity contracted at the fastest pace in a year in early 2018, reversing some of the gains made last year and highlighting a long-standing problem in Britain’s economy, official data showed on Friday.

There were also signs of the kind of inflation pressure that the Bank of England is expected to douse by raising interest rates. Productivity has stagnated since the global financial crisis, even more than in most other advanced economies, and has played a key role in squeezing Britons’ living standards. Over the past 10 years, productivity growth was the weakest since modern records began and appears to be the slowest since the early-1820s.

From January through March, output per hour worked fell by 0.4 per cent quarter-on-quarter, the biggest drop in a year, following a 0.6 per cent rise in late 2017, the Office for National Statistics said. Some of the weakness might reflect a broad economic slowdown during snowy and icy weather in early 2018, but analysts said they saw the same old picture emerging from Friday’s data.

“The relapse in productivity... after the rebound in the second half of 2017 is particularly disappointing as there needs to be sustained improvement to ease concerns over the UK’s overall poor productivity record since the deep 2008-09 recession,” Howard Archer, chief economic adviser to the EY Item Club consultancy, said. —