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IS THE UK PRODUCTIVITY SLOWDOWN UNPRECEDENTED?

Published online by Cambridge University Press:  05 February 2020

Nicholas Crafts  and
Terence C. Mills
Nicholas Crafts
Affiliation:
University of Sussex. E-mail: N.Crafts@warwick.ac.uk.
Terence C. Mills
Affiliation:
Loughborough University. E-mail: T.C.Mills@lboro.ac.uk.
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Abstract

We estimate trend UK labour productivity growth using a Hodrick-Prescott filter method. We use the results to compare downturns where the economy fell below its pre-existing trend. We find that the current productivity slowdown has resulted in productivity being 19.7 per cent below the pre-2008 trend path in 2018. This is nearly double the previous worst productivity shortfall ten years after the start of a downturn. On this criterion the slowdown is unprecedented in the past 250 years. We conjecture that this reflects a combination of adverse circumstances, namely, a financial crisis, a weakening impact of ICT and impending Brexit.

Keywords

Brexitfinancial crisisHodrick-Prescott filterICTproductivity slowdown.C22N13N14O47.
Type
Research Article
Information
National Institute Economic Review , Volume 251 , February 2020 , pp. R47 - R53
Copyright
© National Institute of Economic and Social Research, 2020

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Footnotes

We are grateful to Ryland Thomas for advance access to data from the updated version of the Thomas and Dimsdale dataset. An anonymous referee made helpful comments on an earlier version of this paper. The usual disclaimer applies.

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