GORDON BROWN’S eight-year crusade to boost Britain’s productivity performance suffered another heavy blow yesterday when official figures showed that growth in productivity collapsed to zero in the third quarter.

In the latest setback for the Chancellor’s hopes of securing a step change in the economy’s performance, the Office for National Statistics said that the headline gauge of productivity, output per worker employed, stalled in the three months to September.

The bleak picture was made yet worse by annual data showing that productivity growth in the year to the third quarter tumbled to a meagre 0.4 per cent — a 15-year low.

That was down from 0.6 per cent in the previous three months, 0.9 per cent in the first quarter and an average of more than 2 per cent achieved throughout last year.

The lacklustre trends were further emphasised by an equally poor showing on the main alternative measure of productivity, based on output per hour. On this basis, productivity also failed to rise at all in the third quarter, while it dropped by 0.3 per cent compared with a year earlier.

The disappointing data was immediately seized on by the Conservatives. George Osborne, the Shadow Chancellor, quoted Mr Brown’s assertion that “productivity is the fundamental yardstick of our economic performance”.

Mr Osborne said: “Measured against his own yardstick, Gordon Brown’s performance has been a failure. In a world where we face intense competition Britain should be doing much better.”

The Treasury sought to play down the figures and insisted that it was making “good progress in narrowing the productivity gap” with Britain’s main competitors. A spokesman said that international comparison showed that Britain was the only leading economy to have closed the productivity gap with the US.

There was better news for the Chancellor in the productivity data for the manufacturing sector, which showed a rise of 1.2 per cent in the third quarter, from 0.9 per cent in the previous three months.

Much of the blame for the slide in productivity across the economy as a whole this year can be traced to the recent weakness of growth. With output falling but few employers yet cutting back on staff, productivity has inevitably suffered a cyclical setback that will be reversed if the economy revives next year. Hoarding of staff by firms betting on a resurgence in growth is likely to have proved a key element.

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