UK Productivity Shows Signs of Sustained Improvement

UK productivity is starting to improve, according to a report from the Resolution Foundation published on August 24. The think tank reported that annual growth in output per hour has increased to an average of 1.1% over the two years ending in June 2026. This marks a big rise from a decline of 0.7% in the previous two years and an average increase of 0.7% in the late 2010s.

Key Details

Simon Pittaway, principal economist at the Resolution Foundation, pointed out that while official figures show worsening productivity in the mid-2020s, their analysis shows improvement. He said, "Britain’s dismal productivity record since the global financial crisis explains a lot of its economic stagnation and weak living standards growth. But… our more accurate productivity measure suggests that it has been improving in recent years."

The report indicates that some economists think the productivity boost may come from job cuts in lower-skilled sectors like hospitality and retail. However, the Resolution Foundation disagrees, stating that the share of workers in those sectors has not changed much since the late 2010s. The think tank also claims that productivity gains are not just due to advancements in artificial intelligence, as improvements are seen across many sectors of the UK economy.

Background

Bruna Skarica, chief UK economist at Morgan Stanley, estimates that private-sector productivity growth has risen to 1.8% annually, approaching pre-financial crisis levels. She noted that the UK is seeing trends similar to those in the US, although the US recovery began about a year earlier.

Related coverage: UK Wage Growth Slows to 4.1% Amid Cost of Living Squeeze.

Based on reporting by: businesstimes.com.sg, theguardian.com