(Bloomberg) -- The U.K.’s worst productivity slump in a quarter of a millennium may be caused by a “perfect storm” of three factors, according to a study by economists at the University of Sussex and Loughborough University.
Productivity was almost 20% below its pre-2008 path in 2018 -- the worst slowdown since the reign of George III and a “shockingly bad” performance, said Nicholas Crafts, who co-authored the paper with Terence Mills. It may have been caused by the end of the information and communications technology boom, the financial crisis, and Brexit, they said in research to be published by the National Institute Economic Review on Feb. 6.
Though technology had a substantial impact on productivity around the turn of the 21st century, it contributed less than a quarter of that in the decade since 2008. A new revolution may be on the horizon with artificial intelligence but this has yet to have a significant impact, the economists said. At the same time, Brexit has meant top managers have had to turn their focus to planning, and also led to a relative shrinking of highly productive exporters compared with less efficient domestically orientated firms.