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Weakness in productivity getting worse, reports ONS

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The Office for National Statistics has reported that productivity per hour worked fell 0.2% in the fourth quarter of last year and was little changed on average in 2014 compared with 2013. Output per worker rose 0.3% in the same quarter, indicating employees were increasing the number of hours they worked. The ONS said: 'The absence of productivity growth in the seven years since 2007 is unprecedented in the postwar period.' Missing stalled productivity growth has been the main forecasting error of the Office for Budget Responsibility and the Bank of England over the past five years, with both underestimating the growth of employment while being too optimistic about output growth. Vicky Redwood of Capital Economics noted: 'Productivity has still not even returned to its long-run average growth rate of about 2%, let alone recouped any of the shortfall relative to its pre-crisis trend.'

 

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