Saturday, 20 October 2012

Update on the UK recession, long and large, or short and long


Chart 5: UK output per worker compared with pre-crisis trend, seasonally adjusted

The ONS released a new piece today on the UK Productivity Puzzle.  Some details:


1. current UK output per hour compared with other recessions is a disaster (output per worker does not look much better)








2.    That makes output per worker 10% lower than if it had continued on its pre-recession path:
Chart 4: UK productivity levels, output per hour during UK recessions, seasonally adjusted


3.   The international comparison for the UK is not good either:


Chart 6: International comparisons of output per hour productivity growth since 2008 Q1, seasonally adjusted

















Chart 6: International comparisons of output per hour productivity growth since 2008 Q1, seasonally adjustedh

As the graph shows
1. everyone is worse than the US
2. the UK fell initially by less, but then fell back in the 2011 period, so that it is now at the bottom of the pile relative to 2008Q1 at least. 

As Peter Pattinson said at the seminar launching this document, the early productivity period is not so much of a puzzle, since barring the US, everyone seemed the same.  What is very mysterious is the post 2011 performance.

Could the GDP data be wrong?  Walton and Brown look at this.  Two crucial graphs:

1. mean revisions have got smaller since the 1960s and are negative in recent years (chart 3)
2. since 2005 the revision size is smaller than in the 1990s at 0.3% pa to growth.  So a revision, if upwards would add on average this.  Not enough to restore the 10% gap, but might be enough to restore the UK relative to other non-US in the chart just above.










No comments:

Post a Comment