Productivity weak in UK as US holds lead

Tim Wallace
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PRODUCTIVITY in the UK is weak and economic freedom is in decline, according to figures released yesterday by the Office for National Statistics (ONS) and the Fraser Institute respectively.

Of the G7 rich democracies, only Japan’s workers produced less each than the UK’s in 2010. On an hourly basis British workers perform slightly better, beating Italy and Canada too, according to the ONS initial estimates for last year.

American workers produced 23 per cent more each hour than those in the UK and German output is 18 per cent higher.

Although productivity increased slightly – up one per cent in 2009, but still lower than it was in 2008 – other nations’ productivity increased more quickly. Britain only gained ground against Italy, where productivity was eight per cent higher than in Britain in 2010, compared with 10 per cent higher in 2009.

Economic freedom also declined in the UK in 2009, though less quickly than in other countries. As a result the UK’s score fell to 7.71 out of a possible 10, according to yesterday’s figures from the Fraser Institute. However, its rank actually rose from 10th to 8th place among the 141 countries studied.

“Key ingredients” measured include personal choice; voluntary exchange coordinated by markets; freedom to enter and compete in markets; and protection of their persons and property from aggression by others.

Freedom in the UK declined largely because of higher government spending into 2009 and poorer conditions in credit markets. Other measures improved, however, with falls in the average tariffs on international trade and – at the time – falling inflation.

Globally, the response to the financial crisis damaged economic freedom as governments expanded spending and diminished property rights, the report said.