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News - 18 June 2014

The productivity gap puzzles the Bank of England.

 

 
In The Bank of England’s latest quarterly bulletin, productivity is said to be 16% below its pre-crisis trend - but says it is at a loss to understand why.
 
Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“Measures of productivity, essentially the quantity of goods and services produced per worker or per hour, can be used to inform estimates of an economy's ability to grow without generating too much inflation. Yet even though the UK has seen an improvement in output, productivity has failed to rise in tandem and is below that of other developed countries. Infact British workers now produce about a fifth less for every hour worked than other leading G7 nations.”
 
Productivity is an important factor for the Bank of England to consider when it makes interest rate decisions as it helps it to forecast inflation. The question is how much of the weakness in productivity has been due to weak demand compared with problems generated by the financial crisis.
 
In its May 2014 inflation report, the Bank predicted productivity growth would pick up gradually as the recovery progressed, but said it would still remain "well below" its pre-crisis trend.
 
For those who are looking for a more personal approach on a range of business related issues, contact us at ABDS.
 
ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900 E-mail: abds@netaccountants.net
 
Brilliant with numbers  
Great with people  
Clear and precise with advice
Timely and cost effective
In touch with issues that face our clients
Mindful of our client’s long term strategic goals
 
Helping Your Business is Our Business

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