New study suggests UK productivity may have been undervalued, questioning past data

A recent assessment by the Centre for Economic Performance at the London School of Economics challenges the prevailing view that UK productivity has stagnated. By relying on PAYE-derived employment numbers supplied by the Resolution Foundation, the study estimates a 1.6% annual rise in output per worker since mid-2024, versus the 0.3% average of the prior ten years.

The LFS lost its accredited status in 2024 after response rates fell sharply, forcing the Office for Budget Responsibility to base its forecasts on incomplete data. Those forecasts led Chancellor Rachel Reeves to face a productivity downgrade that tightened fiscal margins and shaped budget decisions. Authors John Van Reenen and Anna Valero argue the new figures reflect genuine gains, possibly driven by early AI adoption and recent public-investment policies. They caution that the true drivers remain uncertain and that improving jobs data should be a priority for policymakers.