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Economic trends: jobs growth hides productivity collapse

Despite Brexit uncertainty, the UK economy continues to grow, creating record levels of employment and no let-up in consumer spending, but poor productivity could lead to an economic hangover, argues George Buckley, chief UK economist at Nomura

Economic growth is currently running close to trend rates in the UK. It is stronger than in many other G7 economies such as Germany, France, Italy and Japan. Inflation is close to its 2% target.

The labour market is tight with the unemployment rate at its lowest in nearly five decades. Wage growth is running slightly faster than its long-run average. A visiting Martian might, therefore, be forgiven for not realising that the UK had voted to leave the EU, and for not noticing any effect of the political turmoil and economic unrest in this latest batch of activity data.

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