Rebound in UK productivity rate may prove short-lived, economists warn
Britain’s productivity rate is likely to remain under pressure, economists have warned, despite a rebound in the second quarter of the year.
Output per hour nudged up 1.4 per cent during the Aprilto-june period compared with the same quarter a year ago, according to new data from the Office for National Statistics (ONS).
Against the first quarter, output rose 0.5 per cent, providing a welcome boost after a drop of 0.6 per cent in the period from January to March.
Workers clocked in for fewer hours in the second quarter, but output growth was stronger.
Economists said the fresh data was a positive signal for the economy, but warned that productivity was unlikely to return to average growth of 2 per cent – a figure based on economic performance prior to the financial crisis.
Howard Archer, chief economic advisor to the EY Item Club think-tank, said: “The rebound in UK productivity growth in [the second quarter] is encouraging but there needs to be sustained improvement to ease concerns over the UK’S overall poor productivity record since the deep 2008-9 recession.
“Part of the UK’S recent poor labour productivity performance has undoubtedly been that low wage growth has increased the attractiveness of employment for companies.
“This helped employment to hold up well during the 2008-9 downturn and to pick up markedly as growth returned.
“The economy’s past prolonged weakness and financial sector problems may have also hurt productivity through under-investment and an inefficient allocation of resources.
“There is concern that an extended inability to access capital may have held back innovation and investment by smaller companies.”