Strongest productivity growth in a decade

BORROWING has fallen to pre-crisis levels and productivity is growing at its fastest pace for a decade, figures show.

The upbeat official data yesterday came as Bank of England chief economist Andy Haldane said the pound’s fall since the Brexit vote had ‘worked its magic’ boosting trade.

However, Bank governor Mark Carney insisted it was ‘not a good economic strategy – it’s how you make yourself poorer’.

Antonio Horta-Osorio, chief executive of banking group Lloyds, was more positive, saying: ‘The UK faces a period of political and economic uncertainty, but … we see an economy that’s resilient and continues to benefit from GDP growth. As an open economy, we also benefit from global growth, which has been increasing.’

Productivity is the main driver of living standards and pushes up wages and tax receipts. It has stagnated since the 2008 financial crisis, despite steady economic growth and record employment levels.

But in a report yesterday, the ONS said output per hour rose by 0.8 per cent in the final three months of last year, after a 0.9 per cent rise in the previous months – adding up to the strongest six months of productivity growth since the recession.

In a boost to Chancellor Philip Hammond ahead of next month’s Spring Statement, another ONS report showed strong tax receipts pushed borrowing to £37.7billion in the first ten months of the tax year – £7.2billion or 16 per cent lower than the same period last year and the smallest shortfall since 2007-8. The Office for Budget Responsibility accepted it had been too pessimistic, saying: ‘It now looks clear that borrowing in 2017-18 will undershoot our November forecast by a significant margin.’

Treasury officials admitted ‘borrowing and debt remain too high’. But Chief Secretary to the Treasury Elizabeth Truss said: ‘These are strong borrowing figures … proof we are fixing our nation’s finances and reducing the burden on future generations.’