LSE Paper Puts UK Productivity Growth at 1.6%, Challenging 0.2% Reeves-Era Estimate
Updated
Updated · spectator.com · Aug 18
LSE Paper Puts UK Productivity Growth at 1.6%, Challenging 0.2% Reeves-Era Estimate
2 articles · Updated · spectator.com · Aug 18
Summary
1.6% annualised productivity growth between Q3 2024 and Q1 2026 is the headline finding of an LSE paper, versus 0.2% using traditional official data and 0.3% on average in the prior decade.
The gap stems from employment measurement: the paper leans on HMRC tax records and related estimates because the ONS Labour Force Survey suffered pandemic-era response collapse, a staffing error and loss of its quality mark.
Those alternative counts also imply a harsher jobs picture, with HMRC showing 133,000 fewer payroll workers in Q1 2026 than in Q3 2024, while ONS data show 377,000 more.
Retail and wholesale lost 131,000 employee jobs and food service and accommodation 93,000, raising the risk that stronger productivity partly reflects low-paid roles disappearing after minimum wage and employer tax increases.
The findings could soften criticism of Rachel Reeves's economic record, but they also sharpen the trade-off between better output per worker and weaker employment growth.