Britain’s productivity is showing signs of a sustained recovery after a slump that began around the 2008 financial crisis and appeared to worsen after the COVID-19 pandemic. Resolution Foundation estimates published on Monday showed annual output-per-hour growth averaging 1.1% over the two years to the end of June 2026, compared with a 0.7% annual decline in the previous two years and average growth of 0.7% in the late 2010s. Higher productivity could lift living standards, support sustainable wage growth without fuelling inflation and ease fiscal pressure from Britain’s ageing population and rising defence spending. It could also provide an important signal for the Bank of England as it assesses the economy’s underlying momentum, while a genuine revival may support sterling and UK equities and raise tax revenues without higher rates. The Office for National Statistics’ main measure has been difficult to interpret because it relied on a workers’ survey whose response rate fell sharply after the pandemic. In June, the ONS recommended using tax data instead, although that data provides less information on hours worked and self-employment. Independent estimates vary: Morgan Stanley chief UK economist Bruna Skarica puts private-sector productivity growth at 1.8% a year, near the pre-global-financial-crisis pace, while Pantheon Macroeconomics chief UK economist Robert Wood questioned whether AI has yet produced broad staffing reductions. The Resolution Foundation said the improvement was broad-based and involved the same workers, jobs and sectors, making it difficult to identify one decisive cause. The trend resembles a productivity acceleration in the United States, which began about a year earlier, and could persist if services benefit from AI as offices did from computers in the 1990s.