May 21, 2024

UK public sector productivity is deteriorating, ONS data shows

Public sector productivity, a key weakness of the British economy, has worsened by the end of 2023 and is far from pre-pandemic levels, the Office for National Statistics said on Friday.

Productivity in the public sector, dominated by education and health, fell 1.0% between the third and fourth quarters of 2023 and was 2.3% lower than a year ago.

Public sector productivity measures the amount of services provided relative to the amount of inputs such as salaries and government resources required to maintain those services.

This is 6.8% below pre-pandemic levels and well below norms 25 years ago.

Finance Secretary Jeremy Hunt has made restoring productivity a national priority. In March, he announced a public sector productivity initiative focused on improving technology in the National Health Service (NHS).

Friday’s data underscores the urgency of this task. In both the health and education sectors, output declined in the fourth quarter despite rising inputs.

Economists say the poor performance of the NHS, one of Prime Minister Rishi Sunak’s five priorities, is now affecting the wider economy.

According to Britain’s official budget forecasters, chronic illnesses have increased the government’s annual debts by about 16 billion pounds ($20 billion) while undermining much-needed labor supplies. ($1 = 0.7964 pounds) (Reporting by Andy Bruce; Editing by Sachin Ravikumar)

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