Productivity fell over the second quarter, despite UK GDP ticking up 0.6%, prompting warnings that sustained growth may be a challenge.
ONS data on Thursday showed productivity declined by 0.1% over the three months to June compared to a year earlier, as “hours worked increased more than gross value added”.
Hailey Low, National Institute of Economic and Social Research economist, warned the slowdown could hinder long-term targets, after Britain’s new Labour government set aims to secure the highest sustained growth across the G7.
“Persistent challenges such as low productivity growth, strained public finances, and inadequate infrastructures have acted as barriers to achieving sustained growth,” she said.
This comes as Britain already grapples with an increasing rate of economic inactivity, with figures earlier in the week showing 9.5 million people out of and not looking for work.
Chancellor Rachel Reeves had said the issue would be addressed in her upcoming autumn budget, adding “if you can work, you should work”.
Low acknowledged that “short-term growth is reassuring,” but noted “it is essential to address issues that have hindered long-term economic growth”.
Thursday data also showed GDP per capita had ticked up by 0.3% over the second quarter, though this was just half of the headline rate and represented a 0.1% decline compared to the same period a year ago.