16th November 2017.
Productivity Up, Pay Squeeze Tightens
Productivity in the UK has finally risen above crisis levels, with workers manufacturing more each hour than before the economic crisis.
Output by British workers has risen by 9 per cent according to new figures from the Office for National Statistics.
Suren Thiru, head of economics at the British Chambers of Commerce, warns against thinking this has recovered the economy, and insists there are still “deep-rooted problems”, from skills shortages to business infrastructure.
Thiru fears the effects the post-Brexit landscape with have on businesses, and expects any trade barriers will further harm growth and increase both inflation and interest rates.
While this productivity is a positive step towards economic growth, this has not loosened the squeeze on pay packets. The Office for National Statistics reported wages had risen by only 2.2 per cent this last year.
This is in line with the weak average growth seen all year; which along with current inflationary pressure and recent drop in employment, is increasing pressure on household finances.
Nonetheless, companies are still keen to hire more workers, and the ONS found 780,000 vacancies from August to October.
Economist Alan Clarke at Scotiabank is confident this trend will continue, and believes the unemployment level will fall to 4.2pc in the October, and to 4.1pc by the end of the year.
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