Early signs of tech-driven improvements in productivity growth could herald a sustained strengthening in the UK’s economic outlook, analysts have said, in a turnaround after years of underperformance. Private sector productivity grew by 1.8 per cent in the second quarter compared with a year earlier, up from 1.2 per cent previously, according to analysis of official data by investment bank Morgan Stanley.

The rise extended gains since 2024 and reduced the growth gap with the US. The reasons behind the upsurge are heavily contested, but some analysts point to increasing AI adoption in sectors including information technology and business services.

If the recent productivity acceleration can be sustained over years, it could bolster incomes and help alleviate some of the strains on Britain’s public finances.

Here is more from Sam Fleming and Amy Borrett at the FT.

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