Britain’s poor productivity record has been highlighted by government figures showing the biggest gap with other leading western economies since modern records began in the early 1990s.

Output per hour worked in the UK was 18 percentage points below the average for the remaining six members of the G7 group of industrial nations in 2014, the Office for National Statistics said.

The gap – up one percentage point on the previous year – was the widest since 1991 and showed a particularly marked deterioration since the onset of the financial crisis and deep recession of 2007-09. The shortfall was slightly smaller than the 20-point gap reported in the ONS’s preliminary estimates released in September 2015.

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In the first half of the 2000s, the UK narrowed its productivity gap with the rest of the G7 to just 4 percentage points but the period since has seen that trend go into reverse.



The ONS’s final international estimates of productivity in 2014 found that output per hour in the UK was now 36 percentage points behind that in Germany - the biggest gap ever recorded with a fellow G7 country and up two points on 2013.

Britain had a 30-point productivity shortfall with the US in 2014 - up three points on the previous year - and an unchanged 31-point gap with France. Only Japan of the G7 countries had a worse productivity record, the ONS said.

The comparisons found that UK productivity was lower than that in the US in every sector of the economy, but was most evident in manufacturing. In the service sector, there had been a sharp deterioration in both financial and non-financial services since 2009.

Productivity among all the G7 countries deteriorated since the so-called great recession, but the ONS said Britain had been hit hardest. Productivity was now 14 points below where it would have been had the pre-crisis trend continued – approximately twice the average for the rest of the G7.

Data for 2015 has shown that a pick-up in productivity stopped in the final three months of the year, when the number of hours worked rose more quickly than the output of the economy.

The new data also compares UK output per hour with some of the smaller European economies – Ireland, Spain, Belgium and the Netherlands – with the record equally unimpressive.



Britain has a five-point productivity gap with Spain, a 30-point gap with Ireland, a 34-point gap with Belgium and a 45-point gap with the Netherlands. The ONS said on its alternative measure of productivity – output per worker – the UK had a 19-point gap with the rest of the G7.

The TUC general secretary, Frances O’Grady, said: “For all the good news on rising employment, the UK is still not creating enough quality jobs. The yawning productivity gap between us and other countries shows how much room there is for us to do better. The loss of middle-income jobs, in vital industries like steel, is holding the economy back and dragging down pay.”