Productivity rise sparks debate

UK productivity improved in the third quarter of 2017 but it remains to be seen whether this is a turning point or a blip.

The latest data shows that productivity levels grew at the highest rate (0.9%) for six years in the third quarter of 2017. But despite the improvement, the Office for National Statistics (ONS) has described current productivity levels as pre-Victorian.

The ONS said: "Examining UK productivity growth on a rolling ten-year basis suggests that the recent UK performance has been among the weakest since official records began and may not be comparable with any period since the early-1820s."

Ian Cass, managing director of the Forum of Private Business (FPB), said that the figures "once again highlight the real need for Government support for the business community. It's our view that those operating the levers of power don't fully understand the needs of the business community at the moment … it's time for some action."

Ian Brinkley, acting chief economist at CIPD, said: "While this increase in productivity is a welcome and positive start to 2018, 0.9% is still a small step at a time when giant leaps are needed … it is too early to say whether this is a sustained recovery or, as we have seen in the past, a temporary blip that ends in disappointment."

However, freelancer body IPSE has welcomed the improvement in productivity. Tom Purvis, IPSE's political and economic adviser, said: "Productivity has been a major challenge for the UK economy since the financial crisis in 2008. Quarter after quarter, we have experienced sluggish growth, but hopefully [these] figures mark a turning point for the economy."

Much of the productivity growth has been driven by the service sector, according to the ONS – a sector that has seen a significant rise in self-employment.

"The UK is now reaping the rewards of a flexible labour market and we hope that the Government takes note of the contribution the self-employed make to the economy – all £255 billion of it," said Purvis. "Now is the time to get behind the self-employed workforce and continue to support them so that the UK can benefit from consistent productivity growth."

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