Low productivity is a crippling problem for the British economy. And it shows little sign of improvement: levels have been virtually flat since 2011. Hourly productivity is now 20% below its pre-crisis trend This week, the Office for Budget Responsibility is set to slash productivity forecasts. If there is no improvement to productivity levels, Philip Hammond is on course to breach his deficit targets. In recent years, low productivity has been offset by growing employment. But unemployment is now so low that expanding the job market can deliver little extra growth.
Productivity is therefore the only game in town – and raising it is critical in both the short term and the long The Government cannot be blamed for poor productivity, which is largely caused by factors outside its control. But the Budget represents a last chance to act before growth is squeezed. This report sets out a plan for how the Chancellor can boost productivity without large short-term fiscal costs.Read Full Report