UK productivity growing faster than official figures suggest, thinktank finds

Productivity in the United Kingdom is rising faster than official statistics indicate, according to a new analysis by the Resolution Foundation. The think‑tank’s principal economist, Simon Pittaway, argues that the latest data—derived from a revised measurement of the labour force—show that output per worker has been improving in recent years, contradicting government figures that suggested a continued decline into the mid‑2020s. The report implies that Chancellor John Healey may have inherited an economy beginning to emerge from the lingering effects of the 2008 global financial crisis, with a more robust productivity trend underpinning the recent joint‑fastest‑growth status of the UK among G7 nations in the first half of 2026.

The foundation’s findings challenge two common explanations for the apparent productivity boost. Some economists have claimed that job cuts in low‑skill sectors such as hospitality and retail have lifted average productivity by shedding less efficient workers, while others have attributed gains to an early wave of artificial‑intelligence adoption. Pittaway rejects both narratives, noting that employment in hospitality remains roughly unchanged from the late 2010s and is only slightly below its post‑pandemic peak, and that the productivity rise is evident across a broad range of industries rather than being confined to AI‑intensive firms. The data therefore suggest that the same workers are delivering higher output while remaining in the same jobs and sectors.

The Resolution Foundation’s upbeat assessment joins a growing chorus of analysts revising their outlook on the British economy. Former Treasury chief economic adviser John Van Reenen, now at the London School of Economics, has similarly highlighted a productivity rethink, while Morgan Stanley’s UK chief economist, Bruna Skarica, described the current environment as “OK,” noting that growth and inflation have been less affected by the Iran war than feared and that consumer confidence has reached a two‑year high. These converging views point to a modest but meaningful shift in the UK’s economic trajectory, potentially easing concerns over stagnation and low living‑standard growth that have dominated discourse since the 2008 crisis.

⚡ Effects Interpreter