Office for National Statistics says Britain was second worst G7 nation for productivity after Covid

Britain’s hopes of being a leading nation for productivity and output were dashed after the Office for National Statistics amended previously published statistics.

Citing a ‘manual error’, the data agency revealed Britain is actually the second worst G7 economy for productivity growth on the back of Covid.

Measurements used to track output per hour were incorrect, heavily skewing the data – which initially suggested Britain had enjoyed the second fastest rise in output per hour, behind Japan.

Britain was elated when initial figures suggested an increase of five per cent between 2020 and 2021, when the nation was under strict pandemic lockdown laws.

In fact, output shrunk by 0.3 per cent in that period, the revised data reveals, which is second only to France’s 0.5 per cent contraction as the worst of the rich nations.

The United States, Canada, Germany and Italy each enjoyed rises in productivity.

The ‘manual error’ occurred because the data had been collected from two different years from differing nations.

The ONS issued the correction yesterday, stating: ‘We have identified and corrected a manual error in relation to output per hour worked growth rates in this publication. 

‘The error was because the estimates of output per hour worked of the countries, in constant prices, had been generated using input from two different years, instead of the same year. 

‘We are adopting additional quality assurance checks to ensure that this does not happen in the future. We apologise for any inconvenience caused.’

In addition to shrinking the outcome of Britain’s data output, the correction revealed Canada’s average output shrunk from 6.1 per cent to 0.8 per cent and Italy from 5.9 per cent to 0.9 per cent. 

A spokesperson for the National Institute for Economic and Social Research told The Times the dismal results were the work of ‘underinvestment in the public and business sectors’.

Citing a ‘manual error’, the data agency revealed Britain is actually the second worst G7 economy for productivity growth on the back of Covid

‘Public investment collapsed from a long-term average of 4.5 per cent of GDP between 1949 and 1979 to about 1.5 per cent after 1979. Similarly, the share of the UK’s GDP dedicated to business investment has been trending downwards since the early 1960s,’ the spokesperson said.

And Andrew Bailey, the governor of the Bank of England, warned there would be unprecedented challenges in measuring productivity data during lockdown.

He also noted the UK’s exit from the European Union could pose a challenge. 

‘It is worth bearing in mind that, while the pandemic was a large and unprecedented economic shock, with profound changes to labour markets and the way we work, it is possible that its long-run effects on productivity will be small,’ Mr Bailey said.

‘Productivity growth is an important determinant of potential output. Estimates of potential output are used to assess the size of the output gap, or level of spare capacity, which influences the degree of inflationary pressure in the economy.’