Until the commencement of the worldwide economic downturn in 2008, the British economy was growing. The gross domestic product (GDP) per capita — an estimate of the total value of everything made in the UK each year, divided by the number of people — was getting larger at a rate of almost 2% per year. If that had carried on, the UK would have produced an average of £47,000 for every person in the country in 2022. If it had grown a bit slower than that, and only grown as fast as the USA has since 2008, the UK would have produced an average of £41,000 per person. Instead, the UK produced an average of £37,000. This has big knock-on effects for everyday life — once you adjust for inflation, the average working person in Britain earned a lower wage in 2022 than the average working person in 2008.
Britain’s relative lack of growth in the last 15 years can be explained by a decline in productivity. Productivity is defined as the average output produced for each hour of work done in the country. Much like GDP, productivity in the UK has stagnated in an unprecedented way — in the 35 years before 2008, productivity doubled. In the 15 years since, it has gone up by 5%. This stagnation became known as the productivity puzzle, and has prompted a lot of debate among economists.
Your organisation does not have access to this article.
Sign up today to give your students the edge they need to achieve their best grades with subject expertise
Subscribe
