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Pound gains ground as United Kingdom productivity rises to a six-year high

12 January 2018

Hourly labour productivity in the United Kingdom showed its largest increase since 2011 between the second and third quarters of past year, official figures have shown.

However, financial services have shown a negative contribution, falling 0.5 per cent.

Britain ranks fifth out of G7 industrial nations on productivity - the amount of work produced either per worker or per hour worked.

Today's figures showed productivity was still 16.6 per cent below its pre-downturn trend, or 19.8 per cent below where it was expected to be by now.

'We're investing in skills, housing and transport to improve productivity, which is vital for raising wages and making our economy fit for the future'.

Earnings and other labour costs outpaced productivity growth, however, pushing unit labour cost growth to and annual rate of 1.3% during the July-September quarter.

Productivity in the services sectors grew by 1% on the previous quarter, while manufacturing recorded a similar rise.

The Government's fiscal watchdog - the Office for Budget Responsibility (OBR) - slashed its productivity outlook for the next five years and made swingeing cuts to its prediction for United Kingdom economic growth. "There needs to be sustained improvement to ease concerns over the UK's overall poor productivity record", said Howard Archer, chief economic adviser to the EY Item Club.

The ONS found Labour productivity on an output per hour basis grew 0.9% between the second and third quarter of 2017, the largest increase since Q2 2011.

He said: "The marked third-quarter rebound suggests that some of the first-half 2017 weakness in productivity may have been cyclical".

Pound gains ground as United Kingdom productivity rises to a six-year high