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Box C: Human Capital and Stagnating Productivity in the United Kingdom

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  • Aditya Goenka
  • Lin Liu

Abstract

Over the past two decades, the United Kingdom has persistently underperformed on productivity, with GDP per hour worked growing by just 0.6 per cent per annum between 2007 and 2019 – below the OECD average of 1.2 per cent. This 'productivity puzzle' has profound implications for living standards, fiscal sustainability, and global competitiveness. Human capital encompassing the knowledge, skills, and health of the workforce, is widely recognized as a key driver of productivity: a healthier, better–educated workforce generates greater innovation, adapts more rapidly to technological change, and sustains higher output per worker. The relative decline in UK human capital – specifically in higher–education enrolment and health outcomes – accounts for a substantial share of its productivity shortfall.

Suggested Citation

  • Aditya Goenka & Lin Liu, 2025. "Box C: Human Capital and Stagnating Productivity in the United Kingdom," National Institute UK Economic Outlook, National Institute of Economic and Social Research, issue 19, pages 43-48.
    • Handle: RePEc:nsr:niesra:i:19y:2025p:43-48
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    File URL: https://niesr.ac.uk/publications/human-capital-and-stagnating-productivity-united-kingdom?type=uk-economic-outlook-box-analysis
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