Is the urgent overtaking the important? Structural economic problems deserve more attentionby Simon Kirby, Amit Kara / May 10, 2017 / Leave a comment
There are many pressing issues related to housing, health, education and our new relationship with the European Union that will dominate the policy debates until 8th June. Political parties will aim to win over voters quickly with messages on these emotive subjects. But amidst the urgency there is a genuine risk that we lose sight of the most pressing structural questions facing the UK economy—questions concerning labour productivity and living standards.
We at the National Institute of Economic and Social Research are highlighting this issue as part of our effort—with the Nuffield Foundation—to ensure that public debate in the run-up to the vote is informed by independent and rigorous evidence.
The UK has a poor record on labour productivity—particularly since the start of the financial crisis. It is not alone; most advanced economies suffered a sudden and sharp drop in labour productivity during the crisis period, but have yet to see much, if any, bounce back. What is striking about the UK performance is that we started with a large productivity deficit against our competitors before the crisis and that gap has got wider since then.