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Britain recorded its strongest productivity growth in more than a decade in the second half of 2017, helped by a strong fourth quarter, but economists said the improvement was unlikely to prove a turning point for one of the economy's key weak spots.
Productivity growth in most advanced economies has been poor since the 2008 financial crisis and in Britain it has been particularly weak, growing by less than 2 percent in total over the past decade and acting as a major drag on wages.
Friday's figures from the Office for National Statistics show a marked improvement from the previous trend.
Economic output per hour worked rose by 0.7 percent in the fourth quarter of 2017, above its long-run average though a shade less than first estimated in February.
Third-quarter productivity growth was revised up slightly to 1.0 percent.
Together the two quarters show the strongest growth since the second half of 2005.
However, the gains were largely due to a sharp fall in the number of hours worked - something that proved a temporary phenomenon when it last took place in 2011.
Official forecasters said last month they assumed the improvement seen in preliminary data would not last.
"The sharp improvement in productivity in the second half of 2017 came amid a surprising drop in hours worked over both the third and fourth quarters ... and may have overstated the underlying improvement," Howard Archer of economic consultancy EY ITEM Club said. British economic productivity is similar to Canada's but around 25 percent weaker than in the United States, Germany and France. Economists blame a mix of low business investment, bad management and poor technical skills training for the shortfall.
Damage to the financial sector from the 2008-09 crisis, a fall in North Sea oil production and a big rise in the number of people in relatively low-paid work have also been identified as factors by the Bank of England and academic researchers.

Copyright Reuters, 2018

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