Under the bonnet

FROM the outside, Britain’s economy looks as if it is ticking over nicely. Last year it grew by 2.8%, more than any other economy in the G7 group of rich countries. Employment has never been higher. And yet a nagging problem bothers its policymakers. Ask any economist what he sees as the biggest risk to the country’s growth prospects and the reply is the same: “productivity”. GDP per hour worked is lower now than in 2007, and flatlining (see chart 1). Mark Carney, the governor of the Bank of England, says that forecasting when productivity growth will return is the trickiest call he has to make. Having steadfastly ignored the issue during the election campaign, George Osborne, the chancellor of the exchequer, now promises a “productivity plan” in his first budget of the new parliament, due in July.