Productivity Conundrum

The Guardian (UK newspaper) this week raised the question of how the UK has managed to create jobs whilst GDP is falling.

It suggests that the answer must be that the productivity of the workforce is falling … so we need more of them.

However, employment figures often lead or lag on economic performance.

An equally valid reason is that firms have confidence in the future and are hiring now to create future output.

Only time will tell which explanation is right.

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