Encouraging economic growth in UK and across G7, but productivity levels still lagging

•  G7 GDP growth rates increased to 1.7% in the last quarter of 2016

• Least variation in growth rates across G7 countries than at any time in past 20 years

• Average G7 productivity growth rates around two thirds slower post-crisis compared to historic trend growth rates

• UK productivity has slowed from 2.5% per annum average growth rate from 1971-2007 to 0.1% between 2008-2016

Real GDP growth in the G7 nations accelerated to 1.7% in the last quarter of 2016, driven by the most consistent growth rates across its members than at any other time in the past 20 years.  According to PwC’s latest Global Economy Watch report, monetary policy (particularly in Europe), fiscal policy and emerging imports are the three key forces behind the improved G7 economic activity.

Barret Kupelian, senior economist at PwC, said:

“The recent synchronised pickup in activity in the G7 is welcome and we expect it to continue at least through the first part of 2017. However, productivity growth will be crucial to the UK and the G7 continuing to prosper. It’s likely to be a central theme of the World Bank-IMF Spring meeting on building a more resilient and inclusive global economy.

PwC analysis shows G7 productivity growth rates have been around two thirds slower post-crisis compared to their historic trend growth rates. The UK has seen one the biggest slowdowns, from a 2.5% per annum average growth rate from 1971-2007 to 0.1% between 2008-2016.

Barret Kupelian commented:

“A mixture of bold structural reforms targeted at both the private and public sectors is needed to help bring about faster productivity growth.

“Typically, governments take on the task to push through economy-wide reforms, by driving large public investment projects or invest more in schooling.

“But we think businesses have an equally important role to play, particularly from a bottom-up perspective. Best practice management techniques, for example, could have an impact on national productivity rates if implemented across a large number of businesses.”

PwC’s real GDP growth projections for 2017 are 1.8% for the G7 and 1.6% for the UK.

Ends.

Notes to editor:

The G7 consists of the US, Canada, France, Germany, Italy, Japan and the UK.

For more details, please see this month’s Global Economy Watch at www.pwc.com/GEW or contact Tilly Parke: [email protected] / ​020 7804 8761.