The UK Productivity Slowdown: A Review of Timing, Magnitude, and Drivers

Labour productivity growth in the UK has been historically slow since around the time of the 2008 global financial crisis. This slowdown has prompted extensive policy interest and research effort, with still little consensus. This article reviews the literature on the UK productivity slowdown, and presents new evidence on its timing, magnitude and drivers. On timing, I argue that underlying productivity growth began slowing before 2008. Aggregate productivity growth in 2007 was propped up by unusually fast growth in the finance and insurance industry, and absent this effect would have flatlined from mid-2006. On magnitude, I suggest the slowdown was a little smaller than typical estimates. Using a pre-slowdown period covering multiple full business cycles gives a better pre-slowdown trend growth rate. Excluding particular industries does not materially alter the trends. On drivers, I suggest that the UK may be more affected by some measurement issues and macroeconomic trends than other advanced economies. Notably the UK has decarbonised quicker than most other advanced economies, which may drag on measured productivity more in the UK than elsewhere. I also update growth accounting analyses using the latest data, broadly confirming findings in recent studies. I conclude with recommendations for UK productivity measurement.