Productivity slips for the second quarter in a row

Courtney Goldsmith
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Productivity has fallen for the first two quarters of the year (Source: Getty)

The UK's productivity puzzle continued to baffle in the three months to the end of June as output per hour fell for the second quarter in a row.

Productivity fell 0.1 per cent in the second quarter of 2017, according to the Office for National Statistics' (ONS) flash estimate. This follows a 0.5 per cent drop in the first three months of the year.

As a result, labour productivity remains at around the same level as its peak before the downturn following the global financial crisis, the ONS said.

Productivity has failed to return to strong growth in the years since the financial crisis despite huge gains in employment, and the UK continues to lag behind rivals including France, Germany and the US in terms of productivity.

The fall in the second quarter was the result of total hours worked growing faster than output.

Percentage change on previous quarter and index of output per hour (Source: ONS)

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Ann Francke, chief executive of the Chartered Management Institute, said another drop in productivity is a real cause for concern in the UK.

“It’s becoming increasingly clear that decisive action is needed if we are to end this downward trend," Francke said.

She said:

Most people still don’t realise that the largest drag on productivity is poor management and leadership skills, estimated to account for almost half of the productivity gap.

Investing in apprenticeships to boost management talent, as well as technical skills, is therefore vital. Not only will doing so help solve our productivity problem, it will be crucial to building a globally competitive UK plc.

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