Productivity growth in Britain’s economy weakened in the first quarter of this year compared to the final three months of 2024 and was down compared with a year previously, official data showed on Thursday.
The Office for National Statistics (ONS) reported that output per hour worked increased by 0.2% in the January-to-March period, weaker than the 0.7% growth in the fourth quarter of last year. Compared with a year earlier, output per hour was down 0.2%.
Despite this slowdown, Britain outpaced the US, where the economy contracted, and the eurozone, which grew 0.4% over the period. On an annualised basis, GDP grew by 2.9%, the fastest rate since the beginning of last year, fueled by growth in the services sector.
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However, the ONS noted that the latest annual change in productivity figures should be interpreted with caution due to low response rates in the Labour Force Survey.
Britain’s economy faces difficulties
The British economy faces several challenges like, An increase in taxes on employers that came into effect at the start of the second quarter, A rise in the minimum wage, which has damaged business confidence, Gradually rising unemployment, according to ONS figures and Uncertainty about future taxes, with the government likely to raise rates and cut spending to meet self-imposed budget rules.
The National Institute of Economic and Social Research warned that these budget rules have become a source of uncertainty that weakens investment and growth.
The UK’s long period of low productivity growth reflects low levels of investment since the global financial crisis and Brexit. A shrinking workforce, strained by an ageing population and the NHS’s struggle with long-term illnesses, may be further impacted by the government’s immigration policies.
