UK productivity has been "underestimated"! Growth rate since the financial crisis revised up to 1.3%, nearly double the previous record

According to reports from Zhishuo Finance APP, new methods published by the UK Office for National Statistics (ONS) on Thursday show that the UK's productivity since the global financial crisis has performed better than previously expected, because statisticians discovered that people’s working hours had been overestimated. Based on the new method released by the ONS, average annual output per hour grew by 1.3% in the decade to 2019, which is nearly double the current recorded rate of 0.7% and closer to the 2% growth rate seen in the ten years before the 2008 financial crisis.

The report further indicates that the resilience of the UK economy has exceeded expectations, following several months of unexpectedly strong economic growth. This is particularly positive news for UK Chancellor John Healey, who will face tricky fiscal conditions in next month’s budget and seek to fill an ever-widening public finance gap.

This is also the latest in a series of ONS revisions to data and survey methods. In recent years, the agency has repeatedly faced shortcomings in labor market, price, and gross domestic product (GDP) data, ultimately leading to a review of the agency and the sudden resignation last year of National Statistician Ian Diamond due to health reasons. His successor was only appointed last week, more than a year after the resignation.

The new “itemized method” adopted by the ONS in productivity statistics results in lower estimated working hours by explicitly accounting for annual leave, public holidays, sick leave, and other changes in working patterns. This approach is based on household and business surveys as well as administrative data. The results show that in 2024, output per hour is 40.7% higher than in 1997, which is over 6 percentage points higher than previously estimated.

This report partially rewrites the narrative of UK productivity in the post-financial crisis period. The UK was previously thought to have slowed more seriously than many other developed economies. The ONS stated that it has communicated this new method to all stakeholders, including HM Treasury. The itemized method will become the official productivity measurement standard in November.

The ONS report states: “Under the itemized method, improvements in actual working time explain half the slowdown in productivity since 2008. Therefore, the ‘productivity puzzle’ still exists under both methods, but it is smaller within the itemized method framework.”

The improved method also shows that during the pandemic, when mandatory leave schemes primarily applied to low-productivity industries, the productivity of those who continued working was close to the pre-2008 trend.

The ONS added that these changes do not affect current GDP figures. The statistical agency will release productivity estimates up to the second quarter of 2026 after this year’s annual GDP dataset is published, after which the new method will be incorporated into its headline productivity data.