Britain’s Productivity Problem Isn’t As Bad As We Thought

TL;DR

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The Office for National Statistics has revised its productivity estimates, putting average UK growth at 1.3% a year from 2009 to 2019, instead of 0.7%. The revision reflects a lower estimate of hours worked, not higher economic output, and changes how Britain’s post-financial-crisis performance compares with other G7 economies.

The Office for National Statistics (ONS) has revised its estimate of UK productivity growth in the decade after the global financial crisis, putting the annual average at 1.3% from 2009 to 2019, rather than the previously estimated 0.7%. The change alters the picture of Britain’s long-running productivity slowdown, but it does not mean the economy produced more: the revised calculation uses a lower estimate of hours worked.

Productivity is commonly measured as economic output per hour worked. The ONS’s updated estimate means the same recorded level of output is divided by fewer estimated hours than in its earlier calculation. That arithmetic raises measured productivity without changing the underlying output figure described in the report.

MoneyWeek reports that the revised annual growth rate for 2009–19 is 1.3%, compared with 0.7% previously. The figures cover the decade following the financial crisis; they are not an estimate of current productivity growth or a forecast for future performance. The supplied report does not specify the size of the revision to the hours-worked series or provide separate annual figures.

The revised reading also changes the UK’s relative position: according to MoneyWeek’s account, it places Britain in the top half of the G7 on productivity, rather than making it an unusually weak performer. That comparison reflects the revised measure, and should not be read as evidence that UK output or living standards rose because of the statistical change.

How the Revision Changes the UK Picture

The revised estimate matters because productivity is closely tied to how much an economy produces for each hour of work. It is used to assess economic performance and inform debate about why growth has been weak. If the earlier estimate understated productivity growth, accounts of the post-crisis period may have overstated the scale of Britain’s relative shortfall.

But the revision does not remove the economic challenges associated with weak output growth. It changes a statistical estimate of the hours behind that output; it does not add production, income or capacity to the economy. For readers, the key distinction is between better measured productivity growth and a genuine increase in what the country produces.

The G7 comparison may also shift how policymakers and commentators describe Britain’s performance. A position in the group’s top half is different from being presented as an outlier, though it does not establish that the UK has solved its productivity problem. Comparisons depend on consistent definitions and comparable data across countries, details not supplied in the report.

The Measure Behind the Productivity Puzzle

The productivity debate centres in part on the period after the 2008 global financial crisis. The previous ONS estimate, as reported by MoneyWeek, put average annual UK productivity growth at 0.7% during 2009–19. The new figure is 1.3% a year, following a change to the way the statistics agency measures productivity.

The measure depends on both sides of a ratio: output and hours worked. If output is unchanged but estimated hours are lower, output per hour rises. This is why the revision can improve the historical growth rate without implying that the economy generated more goods and services than previously recorded.

The change challenges one part of the familiar account of a UK productivity puzzle: that Britain’s measured performance was exceptionally poor. It does not, by itself, explain the causes of the revised hours estimate or settle wider questions about long-term productivity, wages or economic growth.

What the Revised Figures Leave Open

The source account does not give the new ONS methodology in detail, explain why the previous hours-worked estimate was higher, or show how the revision affects years outside 2009–19. It also does not include the underlying data tables needed to check the calculation or compare the revised UK figure directly with each G7 country.

It is consequently unclear from the material provided whether the new estimate changes the interpretation of more recent productivity performance or alters other related economic measures. The updated historical average is confirmed in the report, but its causes and wider effects require fuller ONS documentation.

The 1.3% figure should not be treated as a measure of productivity growth in every year of the decade. It is an annual average across 2009–19, and the supplied material does not describe how growth varied within that period.

The ONS Data Behind the Change

The next step for readers and analysts is to examine the ONS’s revised series and methodological notes, including how its estimate of hours worked changed and whether the update affects other periods. Those details would show how much of the revised growth rate comes from the denominator of the productivity measure and help explain the change in the international comparison.

Until those details are available in the material reviewed here, the firm takeaway is limited but meaningful: the ONS’s revised estimate makes UK productivity growth in 2009–19 look stronger than its earlier estimate did. It does not establish that the UK produced more, nor does it settle whether current productivity performance is improving.

Key Questions

What did the ONS revise?

The ONS changed its productivity measurement. MoneyWeek reports that the revised estimate puts average annual UK productivity growth at 1.3% in 2009–19, up from the earlier estimate of 0.7%.

Does the revision mean Britain produced more?

No. The report says the output level did not rise as a result of the change. The revised productivity figure reflects an estimate of fewer hours worked divided into the same level of output.

What does productivity mean here?

It means economic output per hour worked. A higher estimate can result from higher output, fewer hours worked, or revisions to the data used to calculate either measure.

Does this mean the UK has solved its productivity problem?

No. The revision changes the historical estimate and Britain’s reported position relative to the G7. It does not establish that current productivity is strong or resolve the causes of the UK’s wider economic performance.

Source: rss