UK Productivity Question Remains the Defining Economic Puzzle
Output per hour has barely budged in fifteen years. The Treasury's growth strategy now hinges on whether AI deployment can finally break the spell.
The Office for National Statistics published revised productivity data this morning showing UK output per hour worked grew at an annualised rate of just 0.3 percent over the five years to 2025 — the weakest sustained reading of any major OECD economy.
Chancellor Reeves used a speech at the London School of Economics to outline a new industrial strategy framework that places enterprise AI deployment at the centre of the productivity agenda, including planning reforms intended to accelerate data-centre construction.
The diagnosis is broadly shared but contested. The Resolution Foundation attributes the bulk of the shortfall to chronic underinvestment in capital and skills. The Centre for Economic Performance points to weak management quality outside the largest firms.
City forecasters remain skeptical that AI alone can shift the dial. Goldman Sachs's UK economics team maintains a 1.1 percent trend growth assumption — well below the 2.0 percent embedded in the Treasury's medium-term fiscal projections.
More from Economy
Fed Pivot Signals a New Era for Global Capital Allocation
Chair Powell's measured shift toward easing redraws the map for sovereign wealth, pension funds, and emerging-market debt — with consequences that will reach far beyond Wall Street.
Gulf Sovereign Wealth: The New Architects of Global Capital
From AI to luxury infrastructure, funds in Abu Dhabi, Riyadh, and Doha are deploying capital with a strategic patience that Western institutions can no longer match.
The Supply-Chain Decade: Resilience Becomes a Balance-Sheet Issue
Five years after the pandemic exposed the fragility of just-in-time logistics, corporate boardrooms are still rewriting the global map of production.