The abrupt slowdown in productivity growth in the UK following the GFC was remarkable. Between 1971 and 2007 output per hour grew 2.4% per year on average, falling to just 0.3% per year since then. This change—the ‘productivity puzzle’—is seen in a related form in the US, with recent research identifying a reduction in firm-level responsiveness as a potential explanation. This paper provides new facts on firm-level dynamism for the UK, as a contribution to the diagnosis of the productivity puzzle. Overall, evidence suggests that firm-level adjustment may explain a significant portion of Britain’s productivity slowdown.
My current working paper is here.
Some updated results relating to that paper were used in a recent policy-orientate study joint with Gregory Thwaites and Nadim Hamdan of the Resolution Foundation. That paper Ready for Change is part of the Economy 2030 Inquiry.