Britain’s productivity gap with its main developed country rivals is at the widest it has been for 20 years, claims new data from the Office for National Statistics.
Comparisons between major developed nations show that output per hour worked in the UK is 21% lower than the average for the other members of the G7 – the US, Germany, France, Italy, Japan and Canada. The productivity deficit is most evident when compared with the US, Germany and France, where the gap is over 30%.
This disparity in productivity has been blamed for the lack of earnings growth, and pressure on real incomes in Britain since the economic recession. However, the Bank of England has noted that it expects output per worker to pick up throughout 2014, as the economy continues its recovery.
In keeping with this information, the Bank of England has noted improved productivity as a factor in whether wage growth will surpass inflation in the latter half of 2014, easing pressure on household budgets. Bank governor Mark Carney commented, “We are not complacent about this recovery at all… We need to see productivity come in to validate wage expectations.”
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