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UK productivity during the Blair era

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A new Centre for Economic Performance policy paper published today (Monday 25 June) by Raffaella Sadun examines UK productivity during the Blair era.

The papers key findings are:

  • Productivity is a key indicator of economic health and increasing productivity has been a key objective of the Labour government since 1997. UK labour productivity (GDP per hour) has traditionally been lower than other major industrialised countries.
  • In recent years, the gap in labour productivity with respect to France and Germany has gradually narrowed. Although these improvements are evident since 1991, prior to the Blair government, we would normally have expected productivity growth to have slowed by this point in the business cycle.
  • Despite these recent improvements, output per hour worked in the UK is still about 13 per cent lower than Germany's, 18 per cent below the US level and 20 per cent below France.
  • Low UK productivity is partly due to a deficit of innovation and skills. Recent evidence also suggests that part of the gap might be driven by weaknesses in management.
  • UK productivity benefits from a high degree of competition and openness to trade and foreign investment.
  • Since 1997 total GDP growth has been driven mainly by increases in employment and capital (especially information technology) rather than increases in overall efficiency.

Click here to download the full policy paper| (PDF)




For more comments from LSE academics about Blair's legacy - including economic, education and foreign policy - click here|.

Press cuttings

Lack of innovation is causing UK productivity gap
(26 June 07)
The London School of Economics' Centre for Economic Performance has found GDP per hour worked in the UK is 13 per cent lower than Germany, 18 per cent lower than the US and 20 per cent lower than France. 

Hemscott Analyst
UK productivity lags behind France, Germany, US - study (26 June 07)

UK productivity lags behind France, Germany, US - study (26 June) 

Britain narrows productivity gap (26 June)
Britain has narrowed its productivity gap with France and Germany in the past decade but poor management is still hampering performance, a study showed today. The study by the LSE's centre of economic performance (CEP) said that if Britain had closed the 20 per cent gap with France in output per hour worked, the average Briton could have a pay rise of 20 per cent or take a day off a week and the country would still be as wealthy. 

Financial Times
UK productivity still trails competitors
(26 June)
Gordon Brown's ambition of matching the growth in productivity of the world's big economies appears as elusive as ever after research, by the Centre for Economic Performance at LSE published on Monday said there was 'still a major productivity challenge'. 

In the news
Call for UK productivity improvement (25 June)
Britain faces a 'major productivity challenge' if it is to catch up with other European countries, a report claims today. The Centre for Economic Performance at the London School of Economics (LSE) has identified a positive upturn in productivity since 1991 after decades of disappointing post-war performances.

25 June 2007