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Business News

Britain closing its productivity gap

The much-maligned British worker has achieved a marked improvement in productivity, according to new figures from the Office for National Statistics. The ONS's latest estimates for GDP per worker show that the UK's record on that score is now superior to Japan and similar to that of Germany, though it still lags behind Italy, France, and, especially, the US. It, thus, remains below the average of the G7 "club" of leading advanced economies.

Of still greater significance may be the trend, which shows that British productivity has been catching up with the competition. The UK has experienced faster productivity growth than all other G7 countries since 1991, as measured by GDP per worker. By 2008, UK GDP per worker had grown by 39 per cent since 1991. In terms of GDP per hour worked, British productivity increased by 49 per cent between 1991 and 2007. This represents the fastest rate of growth of any G7 country over the period, well above the average (excluding the UK) of 36 per cent.

Britain's relatively lacklustre productivity has long held back growth and been a concern of governments, and Gordon Brown gave the elimination of the "productivity gap" priority when he entered the Treasury in 1997. The continuous improvement in productivity since the early 1990s has been reversed slightly by the recession, though the UK has seen a less steep fall in GDP, and a less severe rise in unemployment than elsewhere.