Sixteen years. Seven percent.
Between 2008 and 2024, UK output per hour grew by just 7%. In the sixteen years before that, it grew by 45%. Something broke.
If productivity had kept growing…
If the pre-2008 trend had continued, output per hour would be roughly a third higher than it actually is today. That missing productivity is the gap between the economy we have and the economy we could have had.
Britain fell behind its peers
In 2000, UK productivity was close to France and Germany. By 2023, both had pulled ahead. The US — already more productive — widened the gap dramatically.
The league table
Among major advanced economies, Britain produces $79.49 of output per hour worked. The US produces $97.05. France $87.30. Germany $93.72. Only Italy and Canada rank lower among the G7.
A tale of two economies
Mining, energy, and finance produce over £100 per hour. Hospitality, agriculture, and the arts produce under £30. The sectors that employ the most people are often the least productive.
The long tail of low productivity
Accommodation and food services — Britain’s fourth-largest employer — produces just £23.19 per hour. Health and social care, which employs millions, manages only £32.27. These are the sectors where productivity gains would matter most.
Productivity is living standards
If you can’t produce more per hour, you can’t pay people more. Real wages have stagnated since 2008 for exactly this reason. The productivity crisis is the cost-of-living crisis.
And it’s why public services are underfunded
Government revenue depends on economic output. If the economy doesn’t grow, tax receipts don’t grow — but demand for the NHS, pensions, and schools keeps rising. The productivity gap is the root cause of Britain’s fiscal squeeze.
Until Britain solves its productivity problem, the arguments over how to divide the pie will only get more bitter — because the pie isn’t getting bigger.