There have been considerable column-inches devoted to the UK’s ‘productivity puzzle’ in recent months. Since the financial crisis began in 2007, UK labour productivity has been nothing short of terrible - output per hour across the economy is approximately 16% below the level implied by its pre-crisis rate of growth. Chart 1 shows this ‘productivity gap’.

The UK has also fallen further behind its peers - UK workers produce just 76% as much per hour as their US counterparts, down from 81% in 2007.

This has prompted the Bank of England to investigate further, and it recently published a paper on the subject as part of its Quarterly Bulletin.