LONDON: Britain’s growth potential has fallen behind every large economy except Mexico due to collapsing productivity and severe labour market shortages, according to former Bank of England rate-setter Michael Saunders. Potential output, a mixture of productivity and workforce growth, is a measure of how fast an economy can expand before generating inflation. “Low potential growth implies low growth in real living standards,” Saunders wrote in a note. Britain was “roughly in the middle of the pack” of the 43 OECD nations for potential growth between 2010 and 2019, Saunders said. “Unless offset by persistently high inward migration, adverse demographics driven by population ageing are likely to further limit workforce growth in the coming years,” he said.

Source: The Star December 05, 2022 13:12 UTC