Productivity & industrial strategy· Economic growth Yanked away Accounting for the post-pandemic productivity divergence between Britain and America 8 April 2025 Simon Pittaway Britain’s record of productivity growth in the 2010s was dismal. But halfway through the 2020s things appear to have got worse not better, with official data likely understating the scale of Britain’s ongoing productivity crisis. America has been on a different track so far this decade. It is the only G7 economy where productivity growth has accelerated in the 2020s. This report takes a detailed look at sectoral data to uncover the sources of this transatlantic productivity divergence. The report finds that the US has benefitted from its existing strengths. America’s tech (ICT) sector has outperformed Britain’s and a continued boom in American oil and gas extraction has played an outsized role in the aggregate picture. But these cannot fully account for the productivity growth gap that has opened up in recent years. Instead, the gap mostly reflects a broad-based slowdown in key UK service sectors. Turning this around will involve raising investment, innovation and dynamism across large parts of the economy. Failure to do so could see Britian following the 2010s with another decade of economic stagnation.
