‘Productivity’ is one of those ‘economicky words’ (as Philip Hammond described them in the budget last week) that economists and politicians get excited about but leaves many people cold. Yet since last week’s downgraded forecasts from the Office of Budget Responsibility, it is a word we keep hearing in the news. And rightly so. As Tom Danker from the Productivity Leadership Group told a Spectator event in the City on Thursday, ‘productivity is about prosperity’.
The wisdom of economists and politicians isn’t always held in high regard these days. And little wonder. Ten years on, we’re still suffering the effects of the financial crisis that most of them didn’t see coming. There’s not much agreement around, but one thing they do agree on is that our productivity is poor, and that something must be done.
Productivity is more than poor actually: it’s pretty terrible. As Andrew Neil observed, it’s currently over 15 percent below where it would have been if our 2 percent a year productivity growth before the crisis had continued.
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