The Office for National Statistics (ONS) revealed on Friday that public sector productivity in the U.K. continued to deteriorate in late 2023, remaining far below its pre-pandemic levels.
In Q4 of 2023, the U.K.’s public sector productivity declined by 2.3 percent compared to the same quarter in 2022. Compared to Q3 of 2023, productivity declined around 1 percent, its third consecutive quarterly decline. The ONS report reveals that public sector productivity remained 6.8 percent below its pre-coronavirus pandemic peak. However, it has remained relatively stable since Q2 of 2021 through the post-pandemic period.
Moreover, annual estimates suggest that public sector productivity showed no growth in 2023, following a partial bounce-back of 6.5 percent in 2021 and 3 percent in 2022.
The ONS measures public sector productivity by assessing the volume of services the U.K. government delivers against the volume of inputs required to maintain those services. Services include salaries and government funding.
Read: Eurozone’s manufacturing downturn continues to cool in April, says PMI
Government response
Minister of Finance Jeremy Hunt has emphasized the restoration of productivity as a national priority. In March, he unveiled a Public Sector Productivity Plan, placing particular emphasis on enhancing technology within the National Health Service (NHS). However, the latest data highlights the urgent need for action to address the public sector productivity gap in the U.K.
Friday’s data underscored the challenges facing the public sector, with output declining in both the health and education sectors despite increased inputs. Economists caution that the poor performance of the NHS is exerting negative repercussions on the broader economy.
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