UK productivity is' undervalued '! Since the financial crisis, the growth rate has risen to 1.3%, nearly double the old record

The Zhitong Finance App learned that the new method announced by the UK Office for National Statistics (ONS) on Thursday showed that Britain's productivity performance since the global financial crisis was better than previously expected because statisticians discovered that people's working hours had previously been overestimated. According to the new method announced by ONS, in the ten years up to 2019, hourly output grew at an average annual rate of 1.3%, almost double the current record of 0.7%, and closer to the 2% growth rate recorded in the decade before the 2008 financial crisis.

The report further shows that the resilience of the UK economy has exceeded expectations, and economic growth was unexpectedly strong in previous months. This is a big plus for the British Chancellor of the Exchequer, John Healy. He will address the difficult fiscal situation in next month's budget and seek to fill the widening gap in public finance.

This is also ONS's latest revision of data and survey methods. In recent years, the agency has had numerous flaws in labor market, prices, and gross domestic product (GDP) data, which eventually led to the agency's investigation and the sudden departure of National Bureau of Statistics Director Ian Diamond last year due to health reasons. His successor was appointed only last week, and it has been over a year since he left office.

The new “itemization method” used by ONS in productivity statistics derives lower working time estimates by clearly accounting for annual leave, public holidays, sick leave, and other changes in work patterns. The method is based on household and business surveys and administrative data. The results showed that hourly output in 2024 was 40.7% higher than in 1997, and more than 6 points higher than previous estimates.

The report partially rewrites the UK's post-financial crisis productivity narrative. The UK was once thought to be slowing worse than many other advanced economies. ONS said it has communicated with all stakeholders, including the UK Treasury, about the new approach. The segmented approach will become the official productivity measure in November.

The ONS report stated: “Under the sub-item approach, improvements in actual working hours can explain half of the decline in productivity since 2008. As a result, the 'productivity mystery' still exists under both methods, but is smaller in the framework of a piecemeal approach.”

The improved method also showed that during the pandemic, when compulsory leave schemes were mainly applied to low-productivity industries, the productivity of people who were still working was close to the pre-2008 trend.

The ONS added that these changes do not affect current GDP data. The statistics agency will publish productivity estimates for the second quarter of 2026 after the release of the annual GDP data set later this year, and then incorporate the new method into its title productivity data.