Cazenove's Jeffrey on the UK's productivity conundrum

The productivity conundrum

Whatever the complexion of the next government, there is one macroeconomic issue that will require continued investigation: the so-called productivity conundrum.

If anything, the puzzle presented by recent low growth in productivity has become even harder to resolve, following revisions to investment data which suggest the post-recession recovery in business investment was significantly stronger than previously thought.  Having slumped 14.4% in 2009, the subsequent five years saw a cumulative increase of 29.6%, with both 2013 and 2014 setting new all-time highs for investment spending. Despite this, productivity in 2013 and 2014 improved by a paltry 0.4% and 0.5%, respectively. Before investigating the numbers further, it is worth taking a ste...