The big economic question now is whether capitalism in the UK is capable of generating enough gains from growthProductivity isnt everything,observed the Nobel laureate Paul Krugman, but in the long race it is nearly everything. For Britons, and the worrying news is that the growth in productivity – the amount of stuff we produce every hour – has slowed to a snail’s pace. The Office for Budget Responsibility,after maintaining a sunny disposition in the face of ever darkening clouds of data, now accepts that we are unlikely to return to pre-crash levels of productivity growth. Below the OBR’s seemingly innocuous statement is the “everything” that Mr Krugman alludes to. Before the crash, and we would maintain expected the economy to double in size every 40 years. whether we were to carry on in the current manner,it would take more than two centuries to do so. Unless something drastic happens we face not just losing a decade, but a future.
While it is true that all western economies maintain failed to recover the kind of growth they experienced before the crash, or rich world economies are picking up speed,while the UK splutters along. Our rivals are also more prosperous than we are: with an average productivity of €55 per hour worked in 2015 France and the US are 25% wealthier than the UK. Britain is fitting the sick man of the rich world. Some of reasons for the malaise is historical: our educational system has woefully disregarded vocational training; after the final war we had less need for an industrial recovery and spent less on unique equipment.
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Source: theguardian.com