Productivity is the main driver of long-term economic growth and higher living standards. Growth in the UK has been slow over the past decade, and continues to be slow, as the economy struggles to recover from the downturn triggered by the Great Financial Crisis of 2007-8, a phenomenon that has been characterised as the UK ‘productivity puzzle’. Ambiguity around both the severity and duration of the productivity slowdown remains, including around the propagation mechanisms by which demand and supply shocks impact on capital, productivity and trend output growth.
This project uses the firm-level responses to the suite of surveys conducted monthly by the Confederation of British Industry (CBI) over the last twenty years to address the ambiguity around the severity and duration of the UK’s productivity slowdown. The CBI surveys have a good coverage of UK firms and have a long sample held in electronic form covering several business cycles. Survey data provides a direct measure of plans, expectations and real-time information on the context in which businesses make decisions. The CBI data is especially informative on issues relating to investment, output decisions, inventories, capacity and associated constraints. With access to information on the firm identifiers the research team plan to match these data to company accounts information, ONS survey data and administrative data such as VAT returns and PAYE data.
The team will match CBI survey data to company accounts data that allows for the analysis of micro-level planning decisions and outcomes. Improved measurement of investment, inventories, capacity and output will contribute to better understanding of how business cycle fluctuations, temporary and permanent effects of shocks impact on productivity. The project also combines the monthly CBI survey data with official ONS releases on GDP to produce nowcasts and forecasts of key variables in real time.
Using the detail and timeliness of the survey data collected by ONS and CBI can provide meaningful insights into industrial and regional macro-dynamics. Survey data contains important data on capital utilisation, inventories and investment plans that we hope to exploit for the improvement of nowcasts and real-time forecasts of economic activity. The most recent CBI surveys also include questions regarding responses to the Covid-19 pandemic, which will provide valuable insight to firm-level coping strategies to external shocks.