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UK Productivity Sees Surprising Revival
24 Aug
Summary
- UK economic productivity shows signs of sustained improvement.
- Output per hour rose to 1.1% annually for two years ending June 2026.
- Productivity gains are broad-based, not tied to specific sectors.
Recent analyses suggest Britain's economic productivity is experiencing a sustained improvement, signaling a potential end to a slump dating back to the 2008 financial crisis. Resolution Foundation estimates indicate that annual growth in output per hour reached an average of 1.1% over the two years ending June 2026. This marks a significant recovery from previous declines and stagnation.
Economists like Morgan Stanley's Bruna Skarica note that private-sector productivity growth has climbed to an estimated 1.8% annually. Similar trends are observed in the United States, where productivity picked up sooner after the pandemic. Skarica anticipates the improvement in Britain to persist, drawing parallels to the 1990s computer revolution.
The nature of these productivity gains is a subject of ongoing discussion, with the role of artificial intelligence still being debated. However, the improvement appears to be broad-based, affecting the same workers and sectors without clear drivers like reduced employment in certain industries. This suggests a fundamental shift in how economic output is generated per hour worked.
