Poor Productivity and Damaging Demography

Over the past decade the slowdown in growth has reduced UK GDP by 20 per cent and US by 18 per cent. The contributions to this decline are calculated from changes in the population of working age, unemployment, participation rates, hours worked, and labour productivity. This shows that the deterioration in productivity caused 102 per cent of the slowdown in the growth of GDP for the UK and 65 per cent for the US, and the changes in demography caused 15 per cent of the slowdown in the UK and 37 per cent in the US. At least 100 per cent of this decline was therefore caused by damaging changes in demography and productivity. Changes in unemployment, participation rates, and hours worked offset some of the deterioration in demography in the UK but had almost no combined impact in the US.