Working like it's 2008: UK productivity finally passes pre-crisis level

Jake Cordell
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London New Year fireworks
UK workers are finally as productive as they were eight years ago (Source: Getty)

British productivity levels have finally hit their pre-crisis level in the latest milestone in the UK's recovery.

However, Britain still lags behind its G7 counterparts by a significant amount, falling behind the likes of Germany, the US and France in terms of economic efficiency.

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Productivity is seen by economists as arguably the most crucial determinant of long-term economic growth. As a measure of output per hour, it shows how efficient an economy is and, since it is directly related to employment, is a key indicator of wage growth.

If businesses are producing more with less, they should, in theory, have more cash to either invest in expansion or pay rises for staff.

The Office for National Statistics (ONS) said productivity grew by 0.6 per cent in the second quarter in the UK, "and has [now] slightly exceeded it for the first time since 2008".

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Manufacturing productivity was up by 2.2 per cent over the three months, while the services industry was squeezing out 0.6 per cent more for every hour worked.

However, the increase comes after nearly a decade of stagnation, and output per hour in the UK is still 18 per cent below the G7 average. Productivity was 35 per cent higher in Germany last year, 30 per cent higher in the US and 27 per cent higher in France.