Why does the UK have a problem with productivity?
The Briefing Room
BBC
4.8 • 731 Ratings
🗓️ 13 November 2025
⏱️ 29 minutes
🧾️ Download transcript
Summary
The Chancellor, Rachel Reeves has been widely trailing this month’s budget and the difficult decisions she’ll have to make in just under two weeks time. This is being taken as code for tax rises and a possible break in Labour’s manifesto pledge with a rise in income tax. She’s said one of the key reasons for this is that the government's official forecaster, the Office for Budget Responsibility or OBR, is likely to lower its UK productivity growth forecast for the coming years. So why is UK productivity a problem and what can be done to improve it?
Guests: Chris Giles, Economics Commentator, The Financial Times Helen Miller, Director, Institute for Fiscal Studies Duncan Weldon, economist and author Greg Thwaites, Research Director, Resolution Foundation.
Presenter: David Aaronovitch Producers: Caroline Bayley, Cordelia Hemming, Kirsteen Knight Production co-ordinator: Maria Ogundele Sound engineers: Rod Farguhar and James Beard Editor: Richard Vadon
Transcript
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| 0:00.0 | BBC Sounds, Music, radio, podcasts. |
| 0:11.3 | Productivity isn't everything, the Nobel Prize-winning economist Paul Krugman once wrote, |
| 0:16.4 | but in the long run, it's almost everything. |
| 0:19.5 | At the end of the month, the Chancellor Rachel Reeves will present her budget |
| 0:22.4 | and some of the biggest decisions would have been framed by forecasts of the UK economy's productivity. |
| 0:29.0 | She herself has talked about the pressing need to improve it. |
| 0:32.8 | But what exactly is productivity? |
| 0:35.7 | Why is ours so low? |
| 0:40.9 | And what do we need to do to improve it? Step into the briefing room and together we'll find out. First, what is it and why does it matter? I'm joined by |
| 0:49.0 | Chris Giles, economics commentator at the Financial Times. Chris Charles, how do we define |
| 0:53.9 | productivity? |
| 0:54.7 | What is it? |
| 0:55.7 | Well, it's basically what we get out for what we put in. |
| 0:58.1 | So how much stuff is produced, and that includes goods and services for the amount of |
| 1:03.0 | labour, amount of capital, that's equipment, machinery, buildings, and then how it all gets |
| 1:08.2 | mixed together. |
| 1:08.9 | So the more you can get out for the number of people, the machines you've got, |
| 1:14.3 | then that means you're going to be making more money, you're going to be richer, |
| 1:17.9 | and you're going to have a higher standard of living. |
| 1:19.8 | Now, do we measure this in terms of how much money we make for what you'd put in? |
| 1:26.1 | It's essentially ultimately a measure of the value added, which is the amount you produce, |
| 1:31.3 | but that does turn into a number in pounds. |
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