A Positive New Report Raises Questions About Reeves’ Undermining by Dodgy Data

The recent positive economic news in the UK has been met with cautious optimism, but a new assessment of productivity suggests that the prevailing narrative may have been flawed from the start. The Centre for Economic Performance at the London School of Economics (LSE) has released estimates that paint a vastly different picture of the UK’s productivity growth since mid-2024.

These findings are significant because they challenge the widely-held view that Labour’s economic policies were failing to stimulate growth. In fact, according to the LSE’s analysis, annual productivity growth is estimated to be around 1.6%, up from an average of just 0.3% in the previous decade. This marked improvement has major implications for how we understand the UK’s economic performance under Labour.

The Office for Budget Responsibility (OBR) had downgraded its forecast for productivity growth, citing data from the Labour Force Survey (LFS). However, this estimate relied on incomplete and inaccurate information due to problems with response rates in the LFS. The LSE’s researchers instead used alternative estimates based on data from the Resolution Foundation thinktank, which relies on an alternative dataset published by the Office for National Statistics.

The differences between these two datasets are stark. While the LFS records a 377,000 increase in the number of employees since mid-2024, the tax-based measure shows a decline of 133,000. This discrepancy suggests that the OBR downgrade may have been based on flawed assumptions about the workforce and productivity.

The implications of these findings are far-reaching. If productivity growth has indeed picked up, it raises questions about the effectiveness of Labour’s economic policies and the accuracy of its predictions. It also highlights the need for more reliable data to inform policy decisions. The Office for National Statistics’ (ONS) efforts to develop a new online version of the LFS are welcome, but the fact that this new system won’t be implemented until at least next year is concerning.

The lack of a national statistician has added to the challenges facing the ONS. With no head of the agency since Ian Diamond resigned in May 2025, the UK’s statistical infrastructure is being left to drift. This has real-world consequences for policy decisions and public trust.

Rachel Reeves may have been unfairly maligned by some critics who pointed to her struggles with productivity growth as evidence of Labour’s economic failures. The new estimates suggest that she was facing a more complex problem than previously thought, one that required better data and analysis to navigate. As she returns to the backbenches this autumn, she can take comfort in knowing that the narrative around Labour’s economic performance may have been more nuanced than initially apparent.

The productivity conundrum also highlights the need for a more nuanced understanding of artificial intelligence’s impact on the economy. While some experts point to the potential benefits of AI-driven productivity growth, others caution that it is still too early to tell whether this trend will be sustained. Whatever the case may be, one thing is clear: the UK needs better data and analysis to make informed policy decisions.

The recent estimates from the LSE challenge the prevailing narrative around Labour’s economic performance and highlight the need for more reliable data to inform policy decisions. The implications of these findings are far-reaching, and they raise important questions about the accuracy of our understanding of productivity growth and AI’s impact on the economy.