The current slowdown in UK productivity has not been experienced in 250 years, economists at the universities of Sussex and Loughborough have found.
In a paper seeking to establish whether there were any historical examples of productivity slumping to the level it has in the years since the 2008 financial crash, it was discovered that at no time in history since before the industrial revolution was productivity growth so stagnant.
“The rate of productivity growth over the last 10 years has been so weak that it is in the same ballpark as the pre-industrial revolution performance,” said Nicholas Crafts, professor of economic history at the University of Sussex.
According to the Office for National Statistics, the rate of productivity growth in the UK is 19.7 per cent behind the rate expected post-2008 had the financial crisis not happened. Analysis of other economic slowdowns, including the Great Depression of the 1930s and the end of the mid-Victorian boom, found no precedent for a slowdown of this scale.
The study pointed to three key factors contributing to the intensity of the current slowdown: the legacy of the financial crash; the weakening impact of information technologies on economic growth; and uncertainty over Brexit. However, Crafts noted that with new AI technologies and a deal with the EU on the horizon, these may not be permanent problems. “We’ve been through a very bad phase where several things have conspired to undermine productivity performance to a really amazing extent compared with anything we’ve seen in the past,” he said.
“But if our diagnosis of what may have gone wrong is somewhere near correct, then there is some hope that this is really a long temporary problem – not something that is there forever.”