Chancellor upbeat after MP’s challenge about productivity
PHILIP HAMMOND has expressed cautious optimism over a productivity boost for the UK after telling MPs there are signs of improvement.
The Chancellor welcomed recent figures showing two consecutive quarters of productivity growth, although he added it is hoped record employment levels should help to “drive the productivity performance” of the UK economy.
But Mr Hammond did not get carried away in the Commons, noting “one swallow does not make a summer” – although he initially misspoke by saying “spring”.
His remarks came after Conservative former Minister Sir Nicholas Soames said it was becoming “increasingly difficult” to garner the information needed to “truly assess how well we’re doing” on productivity.
Mr Hammond, in his reply, said there is some evidence of a “measurement challenge” when it comes to productivity figures.
He added: “(Conservative former Minister Sir Desmond Swayne) asked about the relationship between high wages, rising wage costs and continued economic growth and continued employment growth.
“The question is why the tightening labour market is not driving a higher productivity performance and whether any element of that is in fact a management challenge? A great deal of time and energy is being spent on this issue and the last two quarters’ figures for productivity do, on the face of it, show some improvement.
“Now, one swallow does not make a spring ... even a summer – you see, I’m even less ambitious.
“We should be very cautious about interpreting those figures but we should expect, as we see record levels of employment in the economy, record high employment figures, we should expect that to help drive the productivity performance of the UK economy.”
Shadow Treasury Minister Jonathan Reynolds earlier pointed to “already dire” economic forecasts which he argued did not factor in a no-deal Brexit that would “severely impact” on jobs, growth and tax revenues.
Liz Truss, Chief Secretary to the Treasury, said it was “very important” to always keep the option of no deal on the table during the EU negotiations “otherwise we won’t get the best possible deal”, but the Government was “very confident of achieving a good deal”.
One swallow does not make a spring ... even a summer. Chancellor Philip Hammond on productivity figures for the British economy.