U.K. Can’t Spend Its Way Out of the Productivity Crisis

U.K. Can’t Spend Its Way Out of the Productivity Crisis

(Bloomberg) -- Britain’s economic progress stalled following the global financial crisis and this has left labor productivity about 20 percent lower than if it had followed its pre-crisis trend. The U.K. can’t spend its way out of this situation, according to analysis by Bloomberg Economics, which shows that the direct impact of weaker capital spending since the financial crisis explains just 4 percentage points of the shortfall. The other 16 percentage points reflect the weaker growth of total factor productivity, and that’s the real problem.

©2018 Bloomberg L.P.