UK productivity data challenges official stagnation narrative

The Resolution Foundation has published a report arguing that UK productivity is growing faster than official statistics indicate, suggesting the economy is finally emerging from the long-term impact of the 2008 global financial crisis. The thinktank’s analysis offers a counter-narrative to the widely criticised labour force survey, which has long been a focal point of debate regarding the health of the British workforce.

Principal economist Simon Pittaway stated that while official data suggests worker output worsened in the mid-2020s, the Foundation’s alternative measure shows a clear improvement in recent years. Pittaway noted that Britain’s dismal productivity record since the financial crisis has historically explained much of the country’s economic stagnation and weak growth in living standards, but the new data points to a shift in trajectory.

The report specifically addresses hypotheses that recent productivity gains are driven by structural changes in the labour market. It rejects the idea that the uptick is the result of job cuts in low-skilled sectors such as hospitality and retail, which would artificially raise average worker productivity. The Foundation points out that the share of the workforce employed in hospitality is no lower now than it was in the late 2010s, remaining only just below its post-pandemic peak.

Furthermore, the analysis suggests the recovery cannot be attributed solely to an early artificial intelligence boom. Pittaway argued that the gains are too widespread across different sectors of the UK economy to be explained by a single technological driver. Instead, the productivity recovery has been achieved by the same workers, doing the same jobs, and working in the same sectors.

This finding aligns with recent official data released last week, which identified the UK as the joint fastest-growing economy in the G7 for the first half of 2026. The report adds to a growing body of evidence painting a more optimistic picture of the current economic landscape under Chancellor John Healey.

Other economists have echoed this sentiment. John Van Reenen, former chief economic adviser to Rachel Reeves, recently published a blog post highlighting a similar productivity rethink by colleagues at the London School of Economics. Additionally, Morgan Stanley’s chief UK economist, Bruna Skarica, noted in a recent research paper that the UK is in a stable position, with growth and inflation hit less hard than feared by the Iran war and consumer confidence at a two-year high.