UK productivity growing faster than official figures suggest, thinktank finds
The Resolution Foundation says UK productivity is improving rather than worsening, contradicting official figures and suggesting the economy is emerging from post-2008 stagnation.
Intelligence analysis by Llama
The Resolution Foundation argues that UK productivity has been quietly recovering in recent years, contradicting official figures that show worsening performance in the mid-2020s. The thinktank rejects AI and sector-shift explanations, saying the same workers in the same jobs are producing more. The report lands alongside official G7-leading growth figures and a Morgan Stanley note ca…
Imagine your teacher says the class is doing worse on tests this year, but a different expert counts the students in a fairer way and finds the class is actually getting a little better. That is what happened with UK workers. A thinktank says Britain's official numbers make the economy look weaker than it really is, and that workers have quietly been getting more productive all along.
Analysis
The Resolution Foundation's labour force survey critique
The Resolution Foundation's central challenge is methodological. The official labour force survey has been widely criticised for years, disrupted by the pandemic and now producing volatile, unreliable readings on employment composition. The thinktank argues that this noise has been bleeding into headline productivity figures, painting a bleaker picture of Britain's output per worker than the underlying economy warrants. If their alternative snapshot is closer to reality, the entire debate about the UK's post-2008 productivity malaise needs rethinking. Productivity is the engine of wage growth and public finances, so getting it wrong distorts everything from Bank of England forecasts to Treasury tax projections.
Pittaway pushes back on AI and sectoral explanations
Two convenient explanations have circulated for any recent uptick in measured productivity, and the thinktank dismisses both. The first, that artificial intelligence is rapidly boosting output, is rejected because the gains appear across sectors rather than concentrating in AI-exposed industries. The second, that low-skilled workers leaving hospitality and retail have mechanically lifted the average, is rejected because the hospitality share of the workforce is no lower now than in the late 2010s and only just below its post-pandemic peak. Principal economist Simon Pittaway's line that the recovery has been 'achieved by the same workers, doing the same jobs, and working in the same sectors' is a pointed rebuke to trendy narratives. It implies the improvement, if real, is something more mundane but perhaps more durable: better management, capital investment, or post-pandemic working practices finally bedding in.
The "OK place" note and G7 leadership claim
The Resolution Foundation's report lands alongside a cluster of unusually cheerful UK signals. Official figures last week showed the UK was the joint fastest-growing economy in the G7 in the first half of 2026, and Morgan Stanley's chief UK economist Bruna Skarica titled her recent research note 'The vibes they are a-changin'', pointing to growth and inflation holding up better than feared through the Iran war and consumer confidence reaching a two-year high. John Van Reenen, the former chief economic adviser to Rachel Reeves, has separately argued for a similar productivity rethink from his London School of Economics colleagues. For Chancellor John Healey, who has just inherited the Treasury, the political implication is significant: if the productivity recovery is genuine rather than a statistical mirage, he may have more fiscal headroom than the gloomy official narrative would suggest.
Key points
- The Resolution Foundation says UK productivity is improving rather than worsening, contradicting official figures for the mid-2020s
- Principal economist Simon Pittaway rejects both AI-driven and sector-shift explanations for any recent uptick
- Official figures last week showed the UK was the joint fastest-growing economy in the G7 in H1 2026
- Morgan Stanley's Bruna Skarica described Britain as 'an OK place' in a note titled 'The vibes they are a-changin''
- Former Reeves adviser John Van Reenen and LSE colleagues have separately argued for a similar productivity rethink
If the Resolution Foundation's productivity measure is closer to reality, the UK may genuinely be emerging from its post-2008 stagnation. That would translate into stronger wage growth, healthier public finances, and more fiscal headroom for Chancellor Healey than the gloomy official baseline implies. The alignment with G7-leading growth figures and Morgan Stanley's cautious optimism suggests the recovery could prove durable rather than a statistical mirage.
The alternative productivity measure is still one thinktank's view, and the labour force survey remains the official benchmark. If the recovery turns out to be a methodological artefact rather than a real gain, Healey could end up making policy decisions on a falsely flattering baseline. The picture also depends on consumer confidence, which is already at a two-year high and remains vulnerable to renewed shocks including the Iran war that Skarica flagged as a still-present risk.
