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Britain’s Productivity Is Growing at Pre-Industrial Revolution Rates

What they found is that the last decade was the worst in terms of growth for 250 years. In fact, it was twice as poor in terms of efficiency gains as the previous poorest decade, which came in the years between 1971 and 1981.

The research looked at the economic output achieved by British workers during an hour of working time. What they found is that the growth rate is as low as it was in the days before steam engines powered our factories. 

Between 1760 and 1800, average growth was 0.13%, but this rocketed when the Industrial Revolution and steam power transformed the economy. The decade of the 2010s were also seen to be four times as poor as the depression in the 1930s, before electricity was widely adopted and productivity began to climb again. 

This result means that UK growth has failed to rise to the same level that it was at when the banking crisis hit the planet.

Why Is This Important?

Growth in productivity is linked to a higher GDP and increased wages. Therefore, there is a direct effect on living standards in the country when growth is as sluggish as it has been in the last decade. 

The researchers concluded that current productivity rate put the country around 20% lower than it would have been at had Britain kept the same growth that it showed before the crisis in 2008. Professors Nicholas Crafts and Terence Mills put this poor performance down to three main issues. The first one is the lingering effect of the 2008 financial crisis.

Another problem is that computer technology hasn’t been able to sustain the massive gains made at the turn of the century, with smaller gains seen in the years since then. The final point that they make in this respect in that the uncertainty over the country’s trading deals after Brexit has also lowered business investment levels.

The research paper confirms that these three factors have all come together for the first time in the country’s history. The result is an average annual increase in productivity during the last 10 years of only just 0.3%, as reported by the Royal Statistical Society. The overall sluggish global climate has also led to an increase in international debt recovery concerns for many businesses.

Before the crisis, the average rate for growth was closer to 2%. As a result, average salaries across the counties are now below pre-2008 levels after inflation is taken into account.
London and the South-East of England remains the country’s most productive region. The big question is whether the rest of the UK can raise their productivity. A recent warning from the Bank of England suggested that the higher trade barriers post-Brexit will make it more difficult to make efficiency gains and also that the country’s growth would probably be 1.1% on average in the period until 2023.