Wimbledon marks the start of the British summer but as the weather heats up, the UK economy is cooling off. In the Summer Budget 2015 last week, George Osborne introduced various supply-side measures including a Living Wage Premium, which could encourage corporates to improve their labour productivity. In response, the UK Office for Budget Responsibility revised its forecast for unemployment back up to 5.4% (after revising it downwards to 5.3% in the March Budget). But this downward revision stems partly from the anticipated increase in productivity - the forecasted average for 2015-2019 was revised upwards by 0.1%. The key to economic recovery in the UK is the return of productivity growth to a sustainable level. When, or rather if, output per worker returns to its pre-crisis trend is difficult to predict. Yet if achieved, game, set and match.
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