UK labour productivity fell by 0.5 per cent in the first quarter of the year (January to March 2017). This compares with growth of 0.4 per cent in the final quarter of 2016, according to the April 2017 Productivity Bulletin published by the Office for National Statistics (ONS).
The fall in productivity is largely as a result of slower gross value added growth, combined with an increase in total hours worked driven by growth in both employment and average weekly hours worked. This indicates that each worker was producing less in each hour that they worked.
According to economists, the weak growth in productivity is restraining wage growth and preventing living standards from improving.
Mike Cherry, Federation of Small Businesses (FSB) National Chairman, comments: “Today’s disappointing statistics throw fresh light on persistent structural weaknesses in the UK economy. Productivity is being stifled by chronic underinvestment, exacerbated by current unprecedented uncertainty, and reflected in sluggish wage growth.
“We know that small firms are continuing to hire, but are struggling to pay more as they absorb surging business costs, now at their highest in four years.
“Two thirds of small firms are not planning to increase capital investment over the next three months. One in seven are planning to decrease investment levels. No doubt some are delaying decisions as they wait for further clarity on the implications of Brexit.
“All the evidence indicates that small business productivity gains would be an economic game-changer. To achieve that boost, the Government has to deliver on its promise of an ambitious industrial strategy. It’s a strategy that must have small firms at its heart, supporting them in supply chains, clamping down on late payments and improving their ability to access to finance.”
For SMEs, the time taken for the money to be approved and then received is putting pressure on businesses and negatively impacting them.
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