By Graeme Roy A poll by You Gov for the 2019 General Election found that around a quarter of voters saw the economy as one of the top three issues that would influence their decision at the ballot box. Now, around half see the economy as one of the key factors in how they will vote on July 4th. It’s perhaps not surprising therefore that the main political parties have all made early pitches on the economy in the campaign.
Ultimately, transforming the UK economy’s fortunes will require a turnaround in our lacklustre productivity performance. The importance of productivity is something that almost all economists agree upon. In the language of economists, productivity compares the value of goods and services produced with the amount of inputs used to produce those goods and services.
In the real world, think of the ‘value of goods and services’ in terms of our business’s annual sales performance, the quality of a product coming off a production line, or the level of health care that we receive. And of ‘inputs’ as the amount of hours we work or the effort that we put in. If we can create more value with the same (or less) work effort, our productivity improves.
As the means to creating value, productivity is crucial for growing wages, tax revenues and living standards. But since 2008, UK productivity has grown more slowly than in every G7 country besides Italy. As a result, average real wages in the UK remain stuck at close to 2010 levels.
As the Institute for Fisca.