UK Productivity Stagnation: The Puzzle Since 2008

UK productivity (output per hour worked) grew at around 2% per year from 1970 to 2007. Since 2008 it has grown at less than 0.5% per year. That gap is the productivity puzzle.

Main causes: weak business investment since the financial crisis, capital diverted into housing, Brexit friction, a service-heavy economy, regional imbalance, low management quality, and zombie firms kept alive by ultra-low rates.

The UK chose labour hoarding (high employment, low wages) over investment (machinery, software, training, automation). The result is rising employment numbers but stagnant living standards.

Almost every UK political and personal-finance frustration of the past 15 years (stagnant wages, strained NHS, housing unaffordability, intergenerational pessimism) ultimately traces back to this single broken trend.