UK productivity growing faster than official figures suggest, thinktank finds

Productivity in the United Kingdom, a key indicator of economic health, is showing stronger growth than official statistics suggest, according to new analysis from the Resolution Foundation. The thinktank's findings indicate that the UK economy may be emerging from the prolonged period of stagnation following the 2008 global financial crisis.

Productivity, which measures economic output per worker, is a critical factor for economic growth and living standards. The Resolution Foundation's research re-evaluates the UK's recent productivity record, employing a methodology they argue provides a more accurate snapshot of the workforce compared to the often-criticized labor force survey. Simon Pittaway, the thinktank's principal economist, stated that while official figures suggest a worsening trend in the mid-2020s, their more precise measure indicates recent improvements.

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Britain’s dismal productivity record since the global financial crisis explains a lot of its economic stagnation and weak living standards growth. But while official figures suggest that the output of workers has worsened further in the mid-2020s, our more accurate productivity measure suggests that it has been improving in recent years.

The thinktank refutes explanations that attribute these gains solely to job cuts in lower-skilled sectors like hospitality and retail, or to an early AI boom. Data shows the proportion of workers in hospitality has not significantly decreased, and the productivity increase is observed across various sectors. Pittaway clarified, "Neither explanation is borne out by the data. Instead, the UK’s productivity recovery has been achieved by the same workers, doing the same jobs, and working in the same sectors."

This analysis from the Resolution Foundation contributes to a more optimistic economic outlook for the UK. It follows recent official figures revealing the UK as the G7's joint fastest-growing economy in the first half of 2026. Other economists and analysts, including those from Morgan Stanley, have also noted positive shifts, with UK chief economist Bruna Skarica describing the economic "vibes" as changing, citing resilient growth and inflation figures despite geopolitical tensions.

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Some have suggested that recent productivity gains have been driven by an early AI boom, and workers leaving low-productivity sectors like retail and hospitality. But neither explanation is borne out by the data. Instead, the UK’s productivity recovery has been achieved by the same workers, doing the same jobs, and working in the same sectors.