Cracking the Productivity Code: An International Comparison of UK Productivity

In contrast, the experienced a broadly similar fall in TFP slowdown in the United States, France and growth after the GFC, but the slowdown in Germany over the same period was only capital intensity was particularly severe in 1.6, 1.5 and 1.0 percentage points respec- the United Kingdom. [...] The left bar of each variable (labour productivity, labour composition,capital intensity and TFP) is the average weighted annual growth rate in the pre-GFC period (1995-2007), and the corresponding right bar is the average weighted annual growth rate in the post-GFC period (2007-2019). [...] De- the four sectors that contributed the most spite the large swings observed during the to the UK’s slowdown.10 In manufactur- pandemic (highlighted by the shaded area) ing and professional services, the decline in in Chart 9, the post-pandemic trajectory TFP growth accounts for over three-fifths of labour productivity in the UK continued of the slowdown. [...] The first Going into the financial crisis, the employ- bar on the left illustrates the slowdown ment rate was highest in the United King- in value-added growth. [...] (2017) argues that the a similar large increase in the employment weak capital intensity growth is induced rate in the United Kingdom in the 1995- by a slowdown in the TFP growth, and 2007 period as there was in the post-2007 proposed an alternative decomposition in INTERNATIONAL PRODUCTIVITY MONITOR 77 terms of the capital-output ratio.