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Productivity Levels

Volume 454: debated on Wednesday 13 December 2006

To ask the Chancellor of the Exchequer what recent assessment he has made of the effects of the level of unemployment on productivity; and if he will make a statement. (107886)

The Government's estimate of trend productivity growth is based on trends in the employment rate rather than the unemployment rate, because it is workers employed in the labour force that determine productivity growth. When adjusting trend productivity growth for changes in the employment rate an assumption is made regarding the productivity of new workers relative to the average worker.

In the light of new evidence published since Budget 2006, the Treasury has reviewed its trends output projections. Analysis of the new evidence, set out in ‘Trend Growth: new evidence and prospects’, was published alongside the pre-Budget report on the6 December 2006.