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UK productivity grew by 0.3 per cent year on year in the final quarter of 2019, official statistics have shown, marking relatively weak growth before coronavirus hit the economy.

The figure was unchanged from the previous quarter but was an improvement from the previous four quarters of zero growth or contraction, the Office for National Statistics (ONS) said.

Nonetheless, the data showed that the UK’s productivity crisis continued even before coronavirus began to ravage the economy. Output per hour worked flatlined over the course of 2019.

Productivity – the amount produced per hour worked – is the key long-term driver of growth and wealth in a country.

Yet it has barely grown since the 2008 financial crisis in the UK, it is one of the factors behind the stagnation of average wages.

The exact reasons for the slowdown are hotly debated, leading to it being called the “productivity puzzle”. Yet a slow recovery from the financial crisis and weak business investment are two factors.

“In historical terms 0.3 per cent is still a very low productivity growth rate, significantly below the post-2008 economic downturn median,” the ONS said.

Most of the growth was driven by the construction sector. Manufacturing, which suffered a torrid 2019 amid Brexit uncertainty, dragged down the figure.

Over the decade, productivity growth was “led by productivity improvements in non-financial services,” the ONS said. “Financial services saw a decline in output per hour.”

Howard Archer, chief economic adviser to the EY Item Club, said coronavirus could damage productivity growth even further.

Investment is a key driver of productivity as training and new technology drive better work. But “coronavirus is bound to take a major near-term toll on business investment”.

Archer said Brexit remained a concern. “Brexit uncertainties are likely to remain significant throughout 2020,” he said.

“Even before the coronavirus outbreak made negotiations harder to carry out, there have been concerns over the possibility of another Brexit cliff-edge late on in 2020.”

 

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