UK Productivity Lower as Brexit Looms

Britain’s dismal track record on improving worker productivity since the financial crisis continued in the first three months of the year, amid mounting concern Brexit will further damage the efficiency growth required for boosting wages.

Economic output per hour of work dropped in the UK by 0.4% in the first quarter after a rise of 0.6% in the final quarter of 2017, according to the latest snapshot from the Office for National Statistics.

The rate of growth for labour productivity in the first quarter was up 0.9% compared with the same period a year ago, about half the average rate notched up across Britain in the years before the 2008 financial crisis. Prior to the downturn the average rate of growth stood at 2%.

The figures will disappoint the chancellor, Philip Hammond, and the business secretary, Greg Clark, who consider a boost to productivity as one of their top targets in government. Economists believe increasing worker efficiency could help to lift pay growth out of the doldrums as companies would be able to generate greater profits with the same resources – enabling them to pay higher wages.

The ONS said the latest fall in productivity came after strong employment growth in the UK earlier this year. When more people contribute to the economy without generating greater levels of economic output, productivity falls. Economists argue Britain has created hundreds of thousands of low-paid jobs since the crisis began a decade ago, rather than opting to invest in technology and skills to boost the number of higher-paid jobs.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza