After a decade in which Britain's productivity performance became a byword for stagnation, LSE economists have identified tentative signs of a turnaround. Analysis by John Van Reenen, professor at the Centre for Economic Performance and former chair of the Chancellor's council of economic advisers, estimates that annualised productivity growth has averaged 1.6 per cent since the third quarter of 2024. That compares with roughly 0.3 per cent a year over the previous decade.
The estimate, reported by the Financial Times and accompanied by a CEP occasional paper on getting the measurement of UK national productivity trends right, matters because productivity is the ultimate driver of wages and living standards. A sustained shift from 0.3 to 1.6 per cent annual growth would transform the fiscal arithmetic facing the Treasury, which has repeatedly been blown off course by weak productivity forecasts.
The work also raises uncomfortable questions about the data on which policy decisions rest. Commentary around the paper asked whether earlier, gloomier official statistics painted too dark a picture of the economy during a politically consequential period. For researchers, the episode underlines how sensitive headline productivity numbers are to measurement choices, and why careful reconstruction of the underlying series is a research contribution in its own right.