A recent report by the Office for National Statistics (ONS) has revealed that the UK’s real gross domestic product (GDP) per head remains 0.6% below pre-pandemic levels as of mid-2024, despite a 2.9% growth in total GDP since 2022.
The gap between population growth and economic expansion is a primary driver of this trend, with a significant rise in the UK population, fuelled by record immigration rates, outstripping the gains in overall GDP.
The ONS attributes the modest growth in GDP per head to a decline in productivity and a reduction in average working hours, which persisted throughout much of 2023. However, the report notes slight improvements in productivity in early 2024, which may signal a shift towards more favourable economic conditions in the near future. Further reweighting of labour market data later this year is expected to offer a clearer picture of these trends.
This economic stagnation has raised concerns among businesses and policymakers alike. Lower productivity levels, coupled with increasing population pressures, point to the need for strategic planning to ensure sustainable economic growth. As 2025 approaches, all eyes will be on the anticipated labour market revisions and the government’s response to boosting productivity in the upcoming budget statement.
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