The UK’s productivity has improved for the second successive quarter, according to the latest figures.
Output per hour rose 0.8% in the fourth quarter of 2017 compared with the same period in 2017, following a 0.9% gain in Q3.
Analysts say the pick-up in productivity suggests weakness in the first half of last year may have been cyclical, with businesses keen to maintain job levels due to fears of a possible labour shortage.
However, accountancy firm EY says there needs to be a sustained improvement to ease concerns over the UK’s overall poor productivity record since the 2008-9 recession.
“There is a risk that prolonged uncertainty and concerns over the UK’s economic outlook could end up weighing down on business investment and damaging productivity,” said Howard Archer, chief economic advisor to the EY ITEM Club.
“Early agreement in 2018 on a Brexit transitional arrangement between the UK and the EU is likely to support to business confidence and investment, with hopefully positive implications for productivity.”
The ITEM Club report said figures from the Office for National Statistics (ONS) suggested poor productivity was largely due to the changing nature of the UK economy, with workers moving from more productive sectors such as mining to less efficient sectors such as food and catering.
However, the ONS also said there had been a slowdown in productivity growth in sectors such as financial services, telecoms and manufacturing.
“The economy’s past prolonged weakness and financial sector problems may have hurt productivity through under-investment and an inefficient allocation of resources,” said Archer.
“An inability to access capital may have also held back innovation and investment by smaller companies.”
He added: “There is a risk is that prolonged uncertainty and concerns over the UK’s economic outlook may end up weighing down on business investment and damaging productivity. Prolonged and difficult Brexit negotiations could increase this risk.”