Graphics animation by Russell Birkett. Charts by Valentina Romei. Written by Chris Giles. Produced by Josh de la Mare. Additional images by Dreamstime.
Productivity. A horrible word. But also the most important source of strong economic performance. Without productivity growth, a nation can only increase the amount of goods and services consumed if more people work, or they work more hours. With it, you can get more out the hours of labour put in. And with that comes higher wages, profits, and tax revenues.
Since the second world war productivity grew steadily. So by the mid-2000s, British workers produced as much in an hour's work than five of their counterparts 100 years earlier. But productivity stopped growing around the time of the financial crisis of 2008-09. This sudden rupture is known as the productivity puzzle.
Zoom in and it's clear. There's been almost no growth since 2008. A worker today produces the same amount in an hour as someone 10 years ago. Had the pre-crisis trend continued, Britain would be over 20% better off. There would be no need for austerity.
And although many countries have suffered a slowdown, the brakes have been slammed on harder in Britain. This has increased the productivity gap between a typical British worker, and their more efficient counterparts in the US, Germany, and France. Don't ever think Britain lacks the best companies right at the forefront of technology. We have these superstar companies. But sadly, we also have a larger rump of low productivity companies.
It's been like this for decades. But it's not the long tail of companies that's caused the slowdown in productivity growth. Low productivity companies have, if anything, raised their game.
The problem now is that it's the strongest companies that are performing not as well as they were. They're still great companies. And they're still improving their productivity faster than the weaker companies. But they're just not sparkling as much as they did a decade ago. And sadly, that has national consequences. Fading stars are not just a problem of ageing football teams.