DEBATE: ­­The UK’s productivity has fallen to pre-2007 levels – should we be worried that it is so low?

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Improvement is happening – you just don’t always see it in the data (Source: Getty)

Vicky Pryce, board member of CEBR and a former government adviser, says YES.

It is concerning that productivity, where the UK lags behind other industrial nations, fell in the first quarter to levels last seen before the financial crisis.

It is true that, on the other side of the coin, the UK now enjoys record employment levels, and the fall in productivity in Q1 reflects a faster rise in hours worked than in output. But what seems to be happening is that, in the face of Brexit uncertainty, firms have chosen not to meet increased demand by investing in plant and machinery or in R&D and innovation, but instead by hiring workers who are easy to fire and whose real wages are falling.

There is a limit to how long one can use the recent fall in the pound and low national pay levels to maintain international competitiveness. Without productivity improvements, both wages and the long term potential of the economy as a whole will be held back. Encouraging investment to increase productivity must be a priority.

Read more: A helping hand in solving the UK’s ‘productivity puzzle’

Dr Victoria Bateman, lecturer and fellow in Economics at Gonville and Caius College, Cambridge, says NO.

We live in an era of economic doom and gloom. Not only do we face rising concern about inequality and, of course, Brexit, but economists increasingly talk of an end to growth. On the one hand, you can understand why. For most of human history, life has been, to quote Hobbes, nasty, short and brutish. For millennia, the economy was stagnant. However, the same thing that first got economic growth going 300 years ago – improvements in science and technology – is still continuing apace. University science departments and private sector R&D labs haven’t yet closed their doors.

Improvement is happening – you just don’t always see it in the data, perhaps because the techniques we use to measure the economy are based on an older and very different age, one of mass production. W

hat matters going ahead is that we hold on to the kinds of values that push forward technological and scientific advance: individual freedom, including freedom to explore, experiment and question, and international openness.

Read more: Productivity slumps as Britons take longer to produce less

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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