The Conversation:
The gaping productivity hole in Osborne's election budget
19 March 2015
Public service spending is in for a rollercoaster ride. The implication of the Autumn Statement was that public service spending would be cut to levels not seen since 1948. Now they will be 36% of GDP - marginally above 1999-2000 (when it was 35.9%). What the chancellor didn't mention is that UK GDP per person is 16% lower than we would have expected on pre-crisis trends and the major factor is lousy productivity growth. Productivity is important because, while the chancellor can point to healthy GDP growth numbers and high employment figures, productivity (GDP per hour) is critical for long-run income growth.
This article was published by The Conversation on March 19, 2015
Link to article here
Related publications
Austerity: Growth Costs and Post-Election Plans, John Van Reenen, CEP Election Analyses Series, March 2015.
Related links
John Van Reenen webpage
Productivity and Innovation Programme webpage