Concern about the economy as public sector productivity falls further | Business News

The official figures have raised fears that the public sector will play a part in the UK’s economic recovery from the recession.

Data from the National Institute of Statistics (ONS) showed that productivity in the public sector, dominated by education and health, deteriorated between the third and fourth quarters of 2023.

It measured a decline of 1.0% during the period, leaving the figure 2.3% lower than the previous year and further away from recovery to pre-pandemic levels.

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The difference was estimated at 6.8%.

Public sector productivity measures the volume of services provided in relation to the volume of factors of production – such as wages and government funding – that are needed to maintain those services.

While the sector has seen the impacts of strikes since the end of the COVID crisis, the NHS has struggled to cope with worsening backlogs on many key waiting lists.

Disputes over funding have been exacerbated by record levels of long-term illness.

The official unemployment rate is just over 4% – around 1.4 million people.

However, the numbers considered economically inactive due to health problems are close to double that sum.

The Office for Budgetary Responsibility estimated the issue added around £16 billion to the government’s annual borrowing bills.

The pressures were reflected in ONS data, with production in the health and education sectors falling during the fourth quarter of the year – contributing to the country’s recession.

This occurred despite the increase in inputs during the period.

In March, Chancellor Jeremy Hunt used his budget to announce a Public Sector Productivity Plan – with an emphasis on improving technology in the National Health Service (NHS).

Next week’s figures are expected to confirm the end of the recession, with global production returning to growth during the first quarter of the year.

Recent private sector surveys have painted a rosy picture for the dominant services sector, which represents almost 80% of global output, despite continued pressure on budgets caused by the impact of inflation and higher interest rates to help address the problem. of prices.