UK productivity growth outpacing official figures, thinktank finds

The British economy may finally be shaking off nearly two decades of sluggish performance. New analysis from the Resolution Foundation, a respected independent research organization, suggests that productivity—the economic output each worker generates—is actually growing faster than the government's official statistics have been reporting. The finding arrives as Chancellor John Healey takes office, and it hints at something economists have been waiting to see: genuine recovery from the wreckage of the 2008 financial crisis.

Productivity is one of those measures that sounds abstract until you realize it determines almost everything about a country's future. If workers produce more value per hour, wages can rise, living standards improve, and the whole economy gains room to breathe. Britain's productivity performance since 2008 has been a national embarrassment—a flat, stubborn drag on growth that no policy intervention seemed to fix. Official figures suggested things were getting worse in the mid-2020s, not better. The Resolution Foundation's work challenges that bleak picture by using what it argues is a more reliable way of measuring the actual workforce than the widely criticized labour force survey that underpins government statistics.

Simon Pittaway, the foundation's principal economist, put it plainly: Britain's weak productivity since the crisis explains much of why the country has stagnated economically and why ordinary people's living standards have barely budged. But the new data tells a different story. Instead of deteriorating further, productivity has actually been improving in recent years—a shift that official numbers have missed.

The obvious question is why. Some economists have theorized that any productivity gains come from a reshuffling of the workforce: lower-skilled workers in hospitality and retail losing their jobs, which makes the average worker look more productive simply because the least productive people have left. Others suggested an early artificial intelligence boom was driving efficiency gains. The Resolution Foundation's analysis rejects both explanations. The share of workers in hospitality is no lower now than it was in the late 2010s, hovering just below its post-pandemic peak. And the productivity improvements are too widespread across different sectors to be explained by AI alone. Pittaway emphasized the real story: the same workers, doing the same jobs, in the same sectors, are simply producing more output. Something has shifted in how work gets done, but it is not a story of displacement or technological disruption—it is a story of genuine improvement.

This finding arrives amid a broader shift in how economists are viewing Britain's prospects. Last week, official figures showed the UK was the joint fastest-growing economy in the G7 during the first half of 2026. John Van Reenen, who served as chief economic adviser to former Chancellor Rachel Reeves, published his own analysis pointing to similar productivity improvements, conducted with colleagues at the London School of Economics. Even Morgan Stanley's chief UK economist, Bruna Skarica, recently released a research note titled "The vibes they are a-changin'," noting that growth and inflation have held up better than feared despite the Iran war, and that consumer confidence has reached its highest level in two years. The picture emerging from multiple quarters is one of an economy that, after years of disappointment, may finally be finding its footing.