Productivity performance varies considerably across the regions of the UK and in recent years, the productivity gap between the UK and Cumbria has widened

There is a long-standing problem with labour productivity in the UK economy. Over several decades, various measures of productivity show a significant gap with major competitors. In 2021, for instance, while levels of output per hour were above those in some countries (eg Italy, Canada, Japan), the UK was 19 per cent below the USA and 15 per cent lower than both Germany and France (House of Commons Library – Briefing No 02791, Economic Indicators, May 2023). These significant gaps have not only existed for some time, but there are few signs of them closing. Preliminary estimates published by National Statistics show that in the first quarter of 2023, UK output per hour was actually 0.6 per cent lower than in the same quarter in 2022, resulting in the weakest annual growth rate since 2013 (excluding the effects of the pandemic). Why does this matter? Fundamentally, weak productivity growth affects economic performance relative to competitors elsewhere. It also constrains the ability of employers to offer higher wages and therefore has negative consequences for living standards. On a more positive note, for some employers measures to increase productivity can be a means to address current labour shortages