{ "title": "United Kingdom: Selected Issues", "publication": "IMF Staff Country Reports, July 25, 2025", "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2025/07/24/united-kingdom-selected-issues-568908", "canonical": "https://www.imf.org/en/publications/cr/issues/2025/07/24/united-kingdom-selected-issues-568908", "overlayPath": "/en/publications/cr/issues/2025/07/24/united-kingdom-selected-issues-568908/index.md", "summary": "This Selected Issues paper examines the evolution of labor productivity, defined as output per worker, in the United Kingdom over the past two decades. It highlights a significant widening of the productivity gap with the United States, particularly after the Global Financial Crisis (GFC).", "sections": [ { "heading": "Summary findings", "content": "- Examines the evolution of labor productivity, defined as output per worker, in the United Kingdom over the past two decades.\n- Identifies a significant widening of the productivity gap with the United States, particularly after the Global Financial Crisis (GFC).\n- Highlights that the loss of pre-GFC growth engines, especially the leverage-driven boom in the financial sector, is a major factor in the divergence.\n- Notes that outside the financial sector, UK publicly listed companies, particularly frontier firms, have also lagged behind their US counterparts due to a substantial decline in total factor productivity (TFP) growth post-GFC.\n- Attributes the decline in TFP growth to reduced investment in intangible capital and lower R&D spending compared to the US." }, { "heading": "Microeconomic drivers and evidence", "content": "- Uses sectoral and firm-level data to explore microeconomic drivers behind the UK–US productivity divergence.\n- Financial sector: loss of pre-GFC leverage-driven growth materially reduced a prior engine of productivity growth.\n- Non-financial publicly listed companies: frontier firms exhibit a notable post-GFC slowdown in TFP growth relative to US peers.\n- Investment patterns: reduced investment in intangible capital and lower R&D spending are identified as proximate contributors to slower TFP growth." }, { "heading": "Policy recommendations", "content": "- Recommends a two-pronged strategy to raise productivity growth:\n - Revitalize traditional growth engines, particularly in the financial and Information and Communication Technology sectors.\n - Foster a more supportive environment for business innovation by increasing access to scale-up finance and retaining high-skilled individuals." }, { "heading": "Key themes and subjects", "content": "- Capital productivity\n- Labor productivity\n- Production\n- Productivity\n- Total factor productivity\n- Emphasis on sectoral productivity patterns, frontier firms, intangible capital, R&D, and UK IP\n\nUnited Kingdom: Selected Issues — IMF Staff Country Reports, July 25, 2025.\n\n---\n\n Content in this bundle\n\n- Great Britain: Selected Issues; IMF Country Report No. 25/205; July 2025\n - Great Britain: Selected Issues; IMF Country Report No. 25/205; July 2025 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Great Britain: Selected Issues; IMF Country Report No. 25/205; July 2025 (PDF){rel=\"external\" type=\"application/pdf\"}" } ], "bullets": [ "[Markdown version](/en/publications/cr/issues/2025/07/24/united-kingdom-selected-issues-568908/index.md)", "[Structured JSON version](/en/publications/cr/issues/2025/07/24/united-kingdom-selected-issues-568908/index.json)", "[Bundle manifest](/en/publications/cr/issues/2025/07/24/united-kingdom-selected-issues-568908/bundle-manifest.json)", "Published: July 25, 2025", "Series: IMF Staff Country Reports", "DOI: https://doi.org/10.5089/9798229018746.002", "Examines the evolution of labor productivity, defined as output per worker, in the United Kingdom over the past two decades.", "Identifies a significant widening of the productivity gap with the United States, particularly after the Global Financial Crisis (GFC).", "Highlights that the loss of pre-GFC growth engines, especially the leverage-driven boom in the financial sector, is a major factor in the divergence.", "Notes that outside the financial sector, UK publicly listed companies, particularly frontier firms, have also lagged behind their US counterparts due to a substantial decline in total factor productivity (TFP) growth post-GFC.", "Attributes the decline in TFP growth to reduced investment in intangible capital and lower R&D spending compared to the US.", "Uses sectoral and firm-level data to explore microeconomic drivers behind the UK–US productivity divergence.", "Financial sector: loss of pre-GFC leverage-driven growth materially reduced a prior engine of productivity growth.", "Non-financial publicly listed companies: frontier firms exhibit a notable post-GFC slowdown in TFP growth relative to US peers.", "Investment patterns: reduced investment in intangible capital and lower R&D spending are identified as proximate contributors to slower TFP growth.", "Recommends a two-pronged strategy to raise productivity growth:", "Emphasis on sectoral productivity patterns, frontier firms, intangible capital, R&D, and UK IP", "**Great Britain: Selected Issues; IMF Country Report No. 25/205; July 2025**" ], "related": [ { "title": "Great Britain: Selected Issues; IMF Country Report No. 25/205; July 2025", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/cr/2025/english/1gbrea2025002-source-pdf.pdf", "summary": { "path": "/-/media/files/publications/cr/2025/english/1gbrea2025002-source-pdf.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/cr/2025/english/1gbrea2025002-source-pdf.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/cr/issues/2025/07/24/united-kingdom-selected-issues-568908/index.md", "json": "/en/publications/cr/issues/2025/07/24/united-kingdom-selected-issues-568908/index.json", "bundleManifest": "/en/publications/cr/issues/2025/07/24/united-kingdom-selected-issues-568908/bundle-manifest.json" }, "generatedAtUtc": "2026-09-11T10:46:55.267Z" }