The United Kingdom's productivity problem predates every recent disruption. It preceded Brexit, the pandemic, and the energy crisis. It has persisted through periods of Conservative and Labour government. It is, in the truest sense, structural.
The Scale of the Problem
UK workers produce around 16% less per hour than their French counterparts, and 23% less than German workers. The gap with the United States is even larger. These are not marginal differences; they translate directly into lower wages, lower public service quality, and lower living standards.
The gap has not always existed. In the 1960s and 1970s, UK productivity growth was broadly comparable with its European peers. The divergence began in the 1980s and accelerated after the 2008 financial crisis.
The Explanations
Economists have proposed many explanations, none wholly satisfying. Underinvestment in physical capital: UK businesses invest less per worker than German or French equivalents. Management quality: studies consistently show lower management capabilities in UK firms. Skills mismatch: too many workers in low-productivity sectors. Poor infrastructure in regions outside London.
The Path Forward
There is no single intervention that fixes productivity. The countries that have improved it most dramatically — Germany in the 1990s, South Korea over a longer period — did so through sustained, coordinated investment in skills, infrastructure, and R&D over decades.
The UK has attempted this kind of coordination before and largely failed. The institutions, the political culture, and the short-termism of British business finance all work against it.
