By Alina Barnett, Sandra Batten, Adrian Chiu, Jeremy Franklin and María Sebastiá-Barriel of the Bank’s Monetary Analysis Directorate.
Labour productivity growth in the United Kingdom has been particularly weak since the start of the crisis. The recent strength in hiring and modest pickup in productivity growth suggest that spare capacity within firms is unlikely to explain much of the current weakness. Factors related to the nature of the financial crisis are likely to be having a persistent impact on the level of productivity — but there remains considerable uncertainty around any interpretation of the puzzle.
The UK productivity puzzle