The latest Office for National Statistics (ONS) statistics* show that labour productivity, measured by output per hour, fell by 0.1 per cent year-on-year in the fourth quarter of 2018, the second consecutive quarter decrease.
Industry experts attribute the political and economic uncertainty on the economy as the main contributing factor to this slump.
Richard Heys, Deputy Chief Economist for ONS, says: “Our latest figures show a continuation of a decade of weak growth, often referred to as the ‘productivity puzzle’, with labor productivity growth lower over the last decade than at any time in the 20th century. It has taken the UK a decade to deliver 2 per cent growth, which historically was achieved in a single year.”
While the public and private sectors, one positive area is healthcare, with more planned procedures taking place than usual through the winter, improving productivity across public services compared with the previous quarter. However, there was a significant 1.1 per cent decrease for manufacturing.
Federation of Small Businesses (FSB) National Chairman Mike Cherry, says that SMEs are not only having to contend with unprecedented uncertainty, with a raft of new cost increases and reporting requirements: “Rising labour costs have continued with the introduction of Making Tax Digital, fresh hikes to business rates and a further increase in auto-enrolment pension contributions.
“In order to improve productivity, key areas that must be addressed include management and leadership, broadband connectivity and the scourge of late payments.
“All this amid the ongoing uncertainty over the future of the UK’s relationship with the EU which shows no sign of reaching a resolution.
“Productivity will only continue to decline unless the Government can do more to step up and back British businesses.”
The outlook for 2019 is very much dependent on the outcome of Brexit. If the UK is to leave the European Union (EU) with a deal, or remain in the EU, this would likely boost investment and consumer confidence. However, leaving with no deal could cause a profound shock to the British economy. An extension to Article 50 would prolong uncertainty and thus continue to hamper investment.
This is a key week for Brexit and therefore, indeed, for the UK economy and British business as a whole.
Beavis Morgan – Specialist advisers to UK SMEs
At Beavis Morgan, we have extensive experience of providing specialist advice and planning to small and medium sized (SME) businesses. We work with our clients to put processes in place to make it easier to run your business and maintain effective management of your company’s working capital. We also assist with management accounts, enabling better control of your financial situation and awareness of the business in real time, enhancing planning for the peaks and troughs.
We are on hand to assist you to remain profitable and increase your net worth.
HMRC Brexit webinars
HM Revenue & Customs is hosting a new set of Brexit webinars covering what UK businesses need to know to keep EU imports and exports moving in the event of no deal. They will cover important actions that businesses trading with the EU must take now. Find out more here. If you have any concerns or queries relating to Brexit and the impact on your business, contact @SteveGovey or your usual Beavis Morgan partner.