British productivity decreased at its most rapid rate in 4 years during the last year after the nation voted in favor of departing from the European Union in a June 2016 referendum. This rapid drop highlights the problems facing the British economy as Brexit looms.
The UK has fought to coax greater productivity from its workers for some time as numerous firms have engaged additional labor instead of investing in needed equipment. Although salary growth has been unimpressive, this move has contributed to unemployment dropping to its lowest in over 4 decades.
British labor productivity per hour in 2016 was more than 15 percent less than that of other developed economies. This is a gap that has widened significantly in the wake of the 2008 financial crisis and shows no real signs of decreasing.
According to economists at Taipei, Taiwan based Clifford Beaumont, output per hour worked in the three months to June this year experienced its biggest fall since the third quarter of 2013.
Before the 2008 financial crisis, yearly productivity growth averaged more than 2 percent.
Clifford Beaumont economists are of the opinion that Brexit, which could mean less skilled labor entering the UK and reduced access to the rest of Europe’s most important export markets, will make it increasingly difficult to catch up.
Clifford Beaumont economists believe that the drawn out uncertainty regarding Britain’s economic outlook are damaging business sentiment, investment and productivity and that extended Brexit negotiations will only exacerbate this problem. In addition, weak output will have a negative impact on the UK’s public finances.