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Page last updated at 10:20 GMT, Friday, 4 January 2013

Is low productivity a structural problem in the UK?


Low productivity may have been a bigger factor of Britain's slow economic recovery than previously thought, according to Bank of England research.

The report, co-authored by the bank's policymaker Martin Weale, comes on the same day as figures from the Office of National Statistics showing that productivity in the private sector has dropped to its lowest level since 2005.

But is this low productivity permanent - possibly structural - or just temporary?

"There's debate about productivity, and more generally, when you look across the advanced economies, we have not had the recovery we would expect to have from a quite sharp recession," said the BBC's Stephanie Flanders. "There's also debate about why growth has been so slow."

Bridget Rosewell from Volterra economics, believes Britain has "quite good growth" but that we are "just not capturing it."

Andrew Sentance, senior economic Adviser to Price Waterhouse Coopers, said he believed Britain is experiencing "volatile economic conditions and disappointing growth" and that Britain has taken "a medium-term hit to productivity".

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