UK Productivity Barely Budged in 2022, Highlighting Struggles for Economy

UK productivity barely budged last year, underlining the struggle to boost the potential of the British economy more than a decade after the financial crisis.

(Bloomberg) — UK productivity barely budged last year, underlining the struggle to boost the potential of the British economy more than a decade after the financial crisis.

An hour of work produced just 0.4% more output than in 2021, Office for National Statistics figures published Tuesday show. In the fourth quarter alone, productivity fell 0.1% from the previous year.

The weakness of productivity growth along with a shrinking workforce prompted the Bank of England this month to downgrade its estimate of how fast the economy can expand without adding to inflation to just 0.7% a year.

That bodes ill for living standards and the public finances in the only Group of Seven country that has yet to recover the output lost during the pandemic.

Since 2009, productivity growth has averaged 0.7% a year, a third of the pace in the period before the financial crisis.

In the fourth quarter, output per hour was 1.9% above its average in 2019, the year before the pandemic struck. However, it was still below where it would have been had productivity continued to rise as it did in the decade before Covid, and well below its pre-financial crisis trend.

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