UK productivity rising faster than official data show, thinktank says

A new analysis from the Resolution Foundation argues that UK productivity — a key measure of economic health — has been growing more strongly in recent years than official figures suggest. The thinktank says this could mean chancellor John Healey has inherited an economy that is finally beginning to emerge from the long-term effects of the 2008 global financial crisis.

Productivity measures the output generated by each worker and is a central driver of economic growth. The Resolution Foundation based its reassessment on what it considers a more accurate picture of the workforce than the widely criticised labour force survey used for official statistics.

Simon Pittaway, the thinktank's principal economist, said Britain's poor productivity record since the financial crisis largely explains its economic stagnation and weak growth in living standards. While official figures point to a further decline in worker output in the mid-2020s, he said the more accurate measure shows productivity has actually been improving in recent years.

Some economists had suggested that any apparent productivity gains stemmed from job losses in lower-skilled sectors such as hospitality and retail, which would raise the average output per worker. The Resolution Foundation rejects this explanation, noting that the share of the workforce employed in hospitality is no lower than in the late 2010s and only slightly below its post-pandemic peak. The thinktank also argues the improvement cannot be attributed solely to early adoption of AI, since it is evident across a broad range of sectors. According to Pittaway, the recovery has come from the same workers, doing the same jobs, in the same sectors.

The report adds to a series of recent, relatively upbeat assessments of the UK economy. Official figures released last week showed the UK was among the fastest-growing economies in the G7 during the first half of 2026. A similar reassessment of productivity was recently published by John Van Reenen, a former chief economic adviser to chancellor Rachel Reeves, together with colleagues at the London School of Economics. Economists at Morgan Stanley have also described the UK as being in reasonably good shape, noting that growth and inflation were hit less severely than feared by the Iran war, while consumer confidence has reached a two-year high.