The productivity problem has pushed the British economy into a crisis, as slow productivity growth threatens the much-needed revival of economic growth and improvements in living standards, according to various economists from the United Kingdom.
Prime Minister Keir Starmer's Labour Party was elected to run the country in a landslide victory on July 4 this year, and subsequently professed shock at the situation they inherited after 14 years of Conservative Party rule.
The new government declared that the country was 'broke and broken' ahead of an assessment of the public finances, which the newly elected party used to blame their predecessors for a 20 billion pound shortfall.
"The assessment will show that Britain is broke and broken - revealing the mess that populist politics has made of the economy and public services," a statement issued by Starmer's office said.
During a panel discussion with China Global Television Network (CGTN) on Friday, three economic sector veterans discussed the current state of the UK economy and the various factors that have brought the world's sixth-largest economy to the verge of national bankruptcy.
John Ross, senior fellow at the Chongyang Institute for Financial Studies under the Renmin University of China, pointed out that the British economy is now under great strain, and the status quo cannot be underestimated, as the lower growth rate has dragged the economy deeper into the mire of stagnation.
"I think 'broken' is exaggeration, 'broke' is not particularly an exaggeration. The situation in the UK economy is extremely serious, but it's not in the sense of an economic collapse, it's just a prolonged stagnation which is going on. If we look at the growth rate, now the largest GDP figures at 0.3 percent, which is close to stagnation. But more urgently than the simply one quarter or one year is the fact that the economy has basically been stagnant almost for a decade and living standards have been stagnant for longer than a decade," he said.
According to Nina Skero, chief executive at the Center for Economics and Business Research, an economic consultancy based in London, the UK government must formulate a coherent pro-growth policy to shore up the country's economic development and unleash more productivity potential.
"I think the big issue is that there has been a lack of a coherent pro-growth policy. And it's very difficult to see what's going to drive economic growth in the UK, and what's going to allow people here to improve their living standards in the years ahead. I think one area that the new government has done already a lot of talking in and hopefully we'll see a lot of action in this phase as well is the UK's planning system. And I do think that a lot of productivity growth could be unlocked from that," said Skero.
"I think, in terms of what's wrong with the UK, it’s a lopsided economy which is far too reliant on its financial services, and that was an intended direction that it took about 35, 40 years ago under the Thatcher government, and which had also basically debased a lot of its manufacturing sector," said Marc Ostwald, chief economist and global strategist at the ADM Investor Services International, a multi-asset investment brokerage company in London.
The UK faces a tough productivity challenge, and it has experienced a slower productivity growth than many comparable countries, Skero noted.
"I think one big underlying theme for a number of years has now been productivity issues in the UK. And even compared to very comparable countries, to other advanced economies, to major European players, to the United States, I think the UK has had a big productivity problem. I think one illustrative way to put this that I always find really useful is that if compared to U.S. workers, if the U.S. workers stopped working at some point around mid-September, they would still produce roughly as much as UK workers working for an entire year. So, I think there has been that underlying problem," she said.
Productivity problem threatens economic growth, improvement of living standards in UK: experts
