Even more puzzling: UK productivity is now 15 per cent below the G7 average

Emma Haslett
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The New State Of The Art Ford Production Line
Work harder: the UK's output is still well behind the G7. (Source: Getty)

The UK's productivity was 15.1 per cent below the average for the G7 group of the world's largest economies last year, new figures have shown.

UK workers were less productive than those in Germany, France, the US and Italy - although they were more productive than those in Canada and Japan, according to a survey by the Office for National Statistics.

However, the figure was a slight rise on the previous year, when output per hour worked in the UK was 15.5 per cent lower than its G7 rivals.

The bad news, though, was that the so-called productivity puzzle, the gap between productivity before the financial crisis and since it, was 15.8 per cent, almost double the G7 average of the 8.8 per cent.

Read more: We can solve the productivity puzzle by investing in people

"The second quarter further relapse in productivity fuels concerns over the UK’s overall poor productivity record since the deep 2008/9 recession," said Howard Archer, the chief economic adviser to EY's Item Club.

"Given the uncertain economic and political outlook, it may be that several companies are trying to meet extra work by taking on labour rather than commit to investment. The relatively low cost of labour relative to capital certainly supports employment over investment."

He added that Brexit may compound things.

"A major risk is that prolonged uncertainty and concerns over the UK’s economic outlook ends up weighing down markedly on business investment and damages productivity," he said.

"Prolonged difficult Brexit negotiations would increase this risk. This could be compounded if foreign companies markedly reduce their investment in the UK and this dilutes any beneficial spill-over of skills and knowledge."

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