For decades, the UK has been considered one of the world’s leading economies, but in recent years, there’s been a growing trend of low productivity.

This productivity lull is putting an increasing strain on businesses and organisations, making it harder for them to grow, get stuff done, stay competitive, and succeed (particularly on the global stage).

The phrase “The Great British Lethargy” is an apt summary of this problem—our productivity has been sluggish, and it’s a trend that’s all too clear, especially in comparison to other G7 nations and key European countries.

The productivity gap stats: How does the UK compare?  

Since the 2008 financial crisis, UK productivity growth has pretty much stalled. Data from the Office for National Statistics (ONS) shows that productivity per hour worked in the UK is about 17% lower than the average of other G7 members. Countries like the US, Germany, and France have managed to keep growing their productivity, but the UK has lagged behind. Even within Europe, nations like Denmark, Sweden, and the Netherlands consistently outperform the UK in terms of productivity growth.

To put it into perspective, in 2019, the UK’s GDP per hour worked was around $49, while Germany’s was $65, and the US’s was $76. That’s a big gap, and it’s not something that will be bridged easily.

The impact of COVID-19 on UK productivity (2019–2024)

Between 2019 and 2024, things got even trickier for the UK economy, especially with the COVID pandemic shaking things up. The pandemic created huge challenges and made existing productivity problems worse—but it also opened up new possibilities for change.

Here’s a quick summary of how the situation has played out so far:

The immediate drop in productivity (2020)

When the pandemic hit in 2020, the UK economy was hit hard. GDP dropped by about 9.9%, the steepest annual decline in over 300 years. Businesses closed, people were furloughed, and many industries like hospitality, retail, and travel faced huge setbacks. As a result, UK productivity took a major hit.

That said, there were some silver linings. While overall productivity fell, certain sectors—like tech and logistics—saw a boost. Companies that were already using technology to their advantage were able to adapt more easily and even increased their productivity. This showed how important digital tools and automation can be for long-term success.

A slow recovery (2021-2022)

By 2021, things started to improve as the vaccination rollout gained momentum and businesses began to find their feet again. More people began working from home, and many companies embraced hybrid work models. While some businesses saw productivity gains from fewer office distractions and greater flexibility, others struggled with remote work challenges, like team coordination and keeping employees engaged.

The ONS data from 2021 showed that productivity improved a bit from the pandemic lows, but it still wasn’t back to pre-COVID levels. In fact, productivity per hour worked in 2022 grew by just 0.6%, which was far less than other G7 countries.

Working patterns changed (forever?)

The pandemic changed how we work in a big way, and these changes are still impacting productivity in 2024. Around half of UK workers now work at least part of the week from home, and this shift has brought both benefits and challenges. Flexibility is great for work-life balance, but it’s also harder for businesses to maintain team collaboration, communication, and accountability—key factors that drive productivity.

At the same time, the pandemic pushed many workers to upskill in digital tools and online collaboration platforms. That shift helped certain sectors boost productivity, particularly those reliant on knowledge work. But the pandemic also worsened existing skills shortages, especially in areas like tech, as many companies didn’t have enough time or resources to train employees for new digital roles. 

Productivity stuck in the slow lane (2023 – 2024)

As the UK moved past the immediate effects of the pandemic, productivity recovery remained sluggish. By 2023, UK productivity per hour showed some growth, but it continued to fall behind many other G7 countries.

Heading into 2024, the UK’s productivity struggles are still tied to a few big issues: ongoing workforce shortages, Brexit-related supply chain disruptions, and rising costs. Some sectors, like tech and finance, have adapted better to the post-pandemic world, but industries like manufacturing, retail, and hospitality are still grappling with lower productivity levels than before the pandemic.

The rise in hybrid working has also made things tricky for businesses. While flexibility is great for employees, it’s harder to measure and manage productivity when teams aren’t in the office together. The companies that have thrived seem to be the ones that invested in remote work tech and staff development from the get-go, with a consistent pattern of having strong working cultures.

Why do productivity stats matter?

1. Lower profit margins

If productivity isn’t up to scratch, businesses end up working harder for less. High operational costs and inefficiency lead to lower profit margins, making it harder to invest in growth or raise wages for staff. It also limits a company’s ability to stay competitive.

2. Employee burnout

When productivity is low, employees are often stretched too thin. They might be working long hours without seeing much improvement in results. This can lead to burnout, high turnover, and disengagement—all of which creates a vicious cycle of spiralling productivity declines.

3. Stagnant growth

Without productivity improvements, companies risk stagnation. They won’t be able to innovate, expand, or reach new markets as effectively. And while productivity remains low in the UK, businesses abroad are continuing to grow and experience higher productivity – so staying still is not an option.

So, what seems to be behind low UK productivity?

As ever, there is never one clear answer but a combination of factors that you may or may not recognise within your own organisation:

1. Low investment in technology and innovation

Compared to other countries, the UK has underinvested in areas like automation, tech, and innovation. Without these tools, businesses end up relying on outdated processes that slow everything down. If companies don’t keep up with technology, they’ll fall behind the competition.

2. Skills shortages

There’s a big skills gap in the UK, especially in industries like tech, engineering, manufacturing and the green sector. Brexit initially made it harder for businesses to bring in skilled workers from Europe, and British workers are not yet fulfilling their potential.

3. Workplace culture

Is this the big one?  The pendulum has certainly swung wildly between being employee- or employer-led, and both extremes have their faults. Is there now a tendency for managers to be reluctant to give feedback or have difficult conversations? Creating workplace cultures of high performance and accountability to deliver, whilst simultaneously treating employees fairly, with respect and clear career opportunities, is the nirvana every organisation seeks!

4. Social norms and expectations

Is our current UK culture “entitled”? Whilst this is traditionally a label put on every new generation entering the workplace, productivity statistics by age range don’t support the view that it is just a Gen Z issue.  Perhaps increased awareness of the impact of stress and work/life balance, has reversed the “in first, out last” cultures of old and that has fed the productivity decline?

CEOs, Owners and MDs: How to tackle the productivity problem

While nationally the UK’s productivity challenges are big, businesses have power to make a real difference within their own organisations. There is no silver bullet that will fix all, but here are five ideas to boost productivity within your own business:

1. Invest (or de-invest) in technology and automation

Technology is key to improving productivity. Whether it’s automating repetitive tasks or using digital platforms to streamline workflows, investing in the right tools will help your team get more done in less time.

Equally, having a spring-clean of old systems and platforms can save thousands.  Are your teams getting full value out of those 500 licences you pay for each and every year?

2. Focus on employee development and delivery

A skilled and motivated workforce is a productive workforce; training, learning, coaching, and mentoring are all parts of developing skills, and are also big motivational drivers. Developing your employees’ skills and motivation will not only boost productivity but will also keep employees engaged and loyal.

Linking development clearly to deliverables for the business gives clarity to the purpose of each role and how important it is to organisational success.

3. Promote a culture of collaboration

Encourage teamwork and idea-sharing. When employees work together, they can come up with creative solutions that drive productivity. Remember to stay focused, though – coming up with ideas is too often the easy and “fun” bit! Make sure there is empowerment and accountability to actually deliver on the ideas that make the biggest positive impact.

4. Define flexible working

Possibly the biggest challenge for big businesses is to clarify flexible working and the expectations on both sides (does flexible working ONLY mean the employer is flexible with the employee, or does it go both ways?). Ultimately, you need to define what is effective to get the job done, maintain team dynamics, and grow the business. Just because people are working at home doesn’t mean they aren’t productive, in the same way that people in an office aren’t always productive either!

Whatever your businesses answer is, consider how you will create a culture of accountability to perform, regardless of where people work from. Which relates to our final point…

5. Leadership and management culture and practices will define your success

Good leadership is crucial. Train and develop your managers so they can motivate, feedback and guide their teams effectively. Empower them to “own” the outcomes of their teams; put your faith in them to deliver and remove the roadblocks they face. 

In the majority of cases, first-line managers have the most “leadership contact” moments with the workforce – so can each frontline team be challenged and motivated to become high-performing in everything that they do?

Final thought

The UK’s productivity problem isn’t going to disappear overnight, and there are factors beyond the control of every organisation that will present obstacles, but with the right attitude and actions, businesses can start making progress for themselves.

The key is leadership.

Leadership from the top is obvious (although not always there – and if not, then that’s the place to start), but can a mentality of accountability, motivation, and capability to deliver be cascaded through all levels of your own organisational hierarchy?

Get that bit right, and the rest will follow and fall into place with a lot more ease!