Johnson pointed out just how woeful the productivity performance of the UK economy had been since 2008. Growth in living standards depends on improvements in productivity, which in the years leading up to the financial crisis averaged more than 2% a year. In the nine years since 2008, Johnson noted, per capita incomes had grown by 2% in total.
“That’s nine years to grow as much as it would normally grow in one.”
What’s more, the productivity growth that has been lost will never come back. That’s because the Office for Budget Responsibility believes the UK has run out of spare capacity, which means the economy cannot grow any faster without generating inflation.
Ouch. Growth into spare capacity isn’t productivity growth. That is, instead, becoming more efficient at doing something and thus a change in the capacity of the economy.