Published by Global Banking and Finance Review
Posted on July 28, 2025
LONDON (Reuters) -British public sector productivity grew at its fastest annual rate in two years in the first quarter of 2025 but remained lower in outright terms than before the pandemic, official figures showed on Monday.
Productivity growth - the main driver of long-term increases in living standards - has been weak across the British economy since the 2008 financial crisis and has slowed more than in similar economies.
British public-sector productivity fell especially sharply during the COVID-19 pandemic, when hospitals were unable to carry out many routine treatments. Afterwards it struggled to recover, partly due to industrial action by health workers.
Monday's data from Britain's Office for National Statistics showed total public service productivity grew 1.0% in the first quarter of 2025 from a year earlier. That was up from annual growth of 0.8% in the final quarter of 2024 and the fastest since the first quarter of 2023.
Public sector productivity growth for 2024 was revised up to 0.1% from a decline of 0.3%, reflecting greater healthcare output than first thought.
However, this revision still left the overall productivity 4.2% below its pre-pandemic level while in the health service last year it was nearly 9% lower than in 2019 and similar to its 2012 level.
Lower productivity levels effectively mean the public must pay more tax to receive the same services as before - adding to the budget challenge facing Britain's government and a broader sense of public dissatisfaction with major political parties.
Measuring public sector productivity is harder than for the private sector as many outputs are tricky to value and it is difficult to track how quality changes.
The health service's own estimates show less of a shortfall than the ONS - particularly for quarterly data - due to differences over high-cost drugs, COVID-19 vaccines and how English data is applied to the rest of the United Kingdom.
Monday's ONS data are classed as being under development, meaning they are more likely to be revised than main ONS data.
(Reporting by David MillikenEditing by Mark Potter)
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