Is the UK Productivity Slowdown Unprecedented?

Publication date: 6 Feb 2020 | Publication type: National Institute Economic Review | Theme: Trade, Investment & Productivity | External Author(s): Crafts, N; Mills, T C | JEL Classification: C22, N13, N14, O47 | Journal: National Institute Economic Review Issue 251 | Publisher: Cambridge University Press

We estimate trend UK labour productivity growth using a Hodrick-Prescott filter method. We use the results to compare downturns where the economy fell below its pre-existing trend. We find that the current productivity slowdown has resulted in productivity being 19.7 per cent below the pre-2008 trend path in 2018. This is nearly double the previous worst productivity shortfall ten years after the start of a downturn. On this criterion the slowdown is unprecedented in the past 250 years. We conjecture that this reflects a combination of adverse circumstances, namely, a financial crisis, a weakening impact of ICT and impending Brexit. 

Keyword tags: 
financial crisis
Hodrick-Prescott filter
productivity slowdown