Falling labour productivity in the UK

Struggling UK labour market with productivity falling. Shows that the UK is unable to address the long running problem with productivity. Hence, GDP growth projections will need to be revisited by the Office for Budget Responsibility.

Labour productivity for Quarter 2 (Apr to June) 2019, as measured by output per hour, fell by 0.5% compared with the same quarter in the previous year; and followed two previous quarters of zero growth.

The chart from an earlier OBN report shows how the productivity problem has not been addressed in the last couple of years. This will remain a major problem and one that Brexit will only make worse as more inefficiency is built into the economic model.

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/bulletins/labourproductivity/apriltojune2019

Interesting research that challenges the agglomeration argument in the UK

Research shows that the differences in productivity across the UK is modest when adjusted for factors including employment rates, commuting, industrial mix and occupational structure.

The result is that promoting growth and jobs in less prosperous parts of the UK does ‘damage’ the productivity of the country’s economy as a whole.

http://shura.shu.ac.uk/24893/1/local-productivity.pdf

Berlin is considering a euro-a-day public transport model

New initiative, replicating the Vienna Model, aimed at getting people to stop using cars, reducing air pollution.

https://www.theguardian.com/world/2019/jul/09/vienna-euro-a-day-public-transport-berlin-365-annual-ticket

A comprehensive analysis of the impact of Brexit has been conducted by academic think tank The UK in a Changing Europe

The report confirms that Brexit will worsen the Government’s fiscal position, significantly reducing ability to promote new policy initiatives.

It concludes that the opportunity to “reset” the UK as promised has been missed. There is little evidence that Brexit has resulted in any fresh thinking on how to create the country envisaged by the Leave Campaign.

Instead Brexit has nothing but negative connotations. It’s no longer about if Brexit will damage the economy, but only about the extent of the damage.

https://ukandeu.ac.uk/wp-content/uploads/2019/06/The-Brexit-Scorecard.pdf

ADS: Brexit uncertainty hampers UK aerospace growth

More evidence of slowdown in investments due to Brexit uncertainty…Brexit is proving to be a luxury that Britain can ill afford.

https://www.flightglobal.com/news/articles/ads-brexit-uncertainty-hampers-uk-aerospace-growth-458864/

Brexit or not – there is crisis in the UK car industry with falling year on year investments, signalling a weakening of the UK’s manufacturing sector…

Investments in the UK’s car manufacturing are falling, with the country missing out on the switch to electric cars. This should send an alarm to politicians, but they are otherwise focused – and with Brexit one has to fear for the wider manufacturing base.

Graphic from the FT and article from the Observer highlights this.

https://www.theguardian.com/commentisfree/2019/jun/09/observer-view-ford-grim-portent-future-industries

Manchester and Liverpool mayors call for termination of Northern rail

More trouble for Grayling and the Department for Transport. Mayors are calling for franchise to be terminated as the operator is not delivering on promises.

https://www.theguardian.com/uk-news/2019/may/29/manchester-and-liverpool-mayors-call-for-termination-of-northern-rail-franchise

Interesting report from the Association for Public Service Excellence (APSE) on the case for insourcing public contracts, showing how the Austerity programme had led to changes in procurement decisions

The report includes a number of case studies. They show that insourcing of takes places across a broad range of services.
“Insourcing reinstates the ability for elected local councillors to determine what resources should go to where. Outsourcing is found to detach the cable from the local lever. Insourcing restores the cable and puts control back into the local democratic institution.”
Insourcing is seen as pragmatic way of improving delivery in terms of efficiency and address specific local needs.
A key driver for this change is the austerity programme. Significant cuts to council budgets has highlighted the inflexibility and inefficiency of private sector involvement.
Councils are therefore better off bringing services in-house to take back control of delivery and benefit from the flexibility it offers.
This highlights a serious side effect to the austerity programme, i.e. a complete overhaul in service delivery. Unlikely Government had considered this to be the end result of the programme.

https://www.apse.org.uk/apse/assets/File/Insourcing%20(web).pdf