World Business News

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Bank of England ‘puzzled’ by productivity gap

Zone(s): UK ¦ Sector(s): Economy
[16 June 2014, BBC News]  The Bank of England says productivity is 16% below its pre-crisis trend – but says it is at a loss to understand why. Its latest quarterly bulletin says that since the onset of the 2007-08 financial crisis, labour productivity in the UK has been exceptionally weak. It records some “modest” improvements in 2013.

However, it says even taking into account possible measurement issues, this shortfall is large and is often called the “productivity puzzle”.

Measures of productivity can be used to inform estimates of an economy’s ability to grow without generating too much inflation.

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