Q1 2026: UK Productivity Edges Up as the UK Leads the G7 for GDP Growth Amid Uncertainty

Productivity Measurement Analysis series – UK Q1 2026 by Nathan McKeogh and Raquel Ortega-Argiles

General summary and main figures

On the 19th of May 2026, the Office for National Statistics (ONS) released its flash estimate of UK productivity for the first quarter of 2026 (January to March). These figures are based on quarterly estimates of gross domestic product (GDP) and labour market statistics. The release also includes sectoral labour productivity data for the fourth quarter of 2025 (October to December).

According to the Labour Force Survey (LFS) estimates, UK productivity (output per hour) in Q1 2026 was 0.4% higher than in Q1 2025. This reflects gross value added (GVA) increasing by 1.1%, outpacing the 0.7% growth in hours worked and resulting in higher recorded productivity.

By contrast, output per worker over the same period decreased by 0.1%. This reflects a 1.2% increase in the number of workers, which outstripped gains in economic output.

Compared with pre-pandemic levels (2019), output per hour increased by 3.5% while output per worker rose by 2.3%. These increases are associated with a 6.8% increase in GVA, alongside rises of 3.2% in hours worked and 4.5% in the number of workers.

Figure 1 shows productivity and its components from 2007 to Q1 of 2026, highlighting the productivity stagnation over the past year.

Figure 1: Output per hour worked vs Hours worked vs Gross Value Added for Q1 2026 Flash Estimate data (Q1 2007 =100). Data Source: Office for National Statistics, Own elaboration by TPI Productivity Lab

Table 1: Flash estimates of labour productivity. UK Quarter 4 (October to December) 2024 to Q1 2026

Output per hour growth rates

Output per worker growth rates

Headlines: Flash estimates of Labour Productivity, UK Q4 2024 to Q1 2026

Output per hour – growth rates

• Relative to 2019 levels, output per hour ranged from 2.2% to 3.5% above the pre-pandemic average between Q1 2025 and Q1 2026.
• Quarter-on-year growth rates fluctuated between -0.6% and 1.1%, with Q1 2026 matching Q1 2025 at 0.4% year-on-year.
• Quarter-on-quarter growth was more volatile, ranging from -0.8% in Q2 2025 to 0.9% in Q1 2026.

Output per worker – growth rates

• Relative to 2019 levels, output per worker remained between 1.8% and 2.4% above the pre-pandemic average over the same period.
• Quarter-on-year growth alternated between small negative and small positive rates (from -0.8% to 0.1%).
• Quarter-on-quarter growth was modest, never exceeding 0.2%, and flat in Q4 2025.

These figures signal a pattern of weak and inconsistent productivity growth, despite modest gains relative to pre-pandemic levels.

Sectoral contributions for Q4 2025

Sectoral contributions in Q4 2025 are consistent with prior quarters in 2025. The Information Technology (IT); Professional, Scientific and Technical Activities; and Manufacturing industries were the main drivers of productivity growth, delivering the strongest positive contributions relative to 2019 levels.

The IT industry recorded the strongest productivity growth, at 2.5%. This was driven by GVA rising faster than hours worked, resulting in an improvement in output per hour. The sector continues to show strong upward momentum, potentially linked to investment in cybersecurity and A.I. by firms, as researched by KPMG.

On the other hand, the Human Health and Social Work sector made the largest negative contribution (-1.1%). In this case, hours worked increased substantially faster than output, resulting in lower productivity.

The energy sector (electricity, gas, steam and air conditioning supply) also continues to perform poorly across recent quarters, with significant decreases in GVA since 2019. The ONS has noted that the results for this sector should be handled with caution, and the results and methods are under review.

To illustrate these sectoral effects:

• Figure 2 shows the contributions to output per hour (OPH) growth by industry, with bar widths scaled to reflect the relative size of each industry. The Financial and Insurance Activities sector, the Human Health and Social Work sector and the energy sectors experienced the largest contractions. Together, these industries account for a substantial share of the UK economy (18.94%). This means that contractions within these industries can have a significant effect on overall UK economic performance.
• The sectors experiencing both the strongest growth and the sharpest declines are also among the largest contributors to UK output, making the wider economy more sensitive to sector-specific fluctuations.
• Figure 3 illustrates the changes in output per hour worked, GVA and hours worked for each industry in Q4 2025 relative to 2019.

Figure 2: Contribution to growth of output per hour worked by industry, percentage points, Q4 2025 compared with 2019 average, with width of the bar representing relative size of industry. Data Source: Office for National Statistics, Own elaboration by TPI Productivity Lab

Figure 3: Industry Breakdown: Output per Hour, GVA and Hours worked changes, Q4 2025 compared with 2019 average. Data Source: Office for National Statistics, TPI Productivity Lab reproduction of Office for National Statistics figure

Experimental methods

To better understand quarterly changes in productivity, the ONS publishes experimental, quarterly estimates of productivity using Pay As You Earn (PAYE) Real Time Information (RTI) from HMRC, which complement the Labour Force Survey (LFS). These alternative estimates often suggest stronger recent productivity growth than the LFS, but should be interpreted with caution, as they are statistics in development.

RTI data do not include information on self-employment (SE). To address this, LFS self-employment figures are appended to the RTI data. To avoid double counting of self-employed workers, working proprietors (self-employed individuals who exclusively own and operate a business) are removed.

It should be noted that RTI provides an estimate of workers rather than hours worked. Therefore, the hours worked component used in the RTI output per hour measure is calculated by multiplying average hours worked from the LFS by the RTI estimate of workers.

More information about the methods behind this data is available in the ONS Q3 2024 release.

Comparing Quarter 1 2026 with the 2019 average:

• Output per worker increased by 4.2% using RTI data, compared with 2.3% using LFS data.
• For output per hour, RTI estimates growth of 5.5% in Q1 2026, compared with 3.5% using the LFS.

Figures 4 and 5 compare the RTI + SE and LFS measures over two periods: Q1 2015 to Q1 2019 and Q3 2021 to Q1 2026 side by side. The intermediate period of Q2 2019 to Q2 2021 has been omitted to avoid distortion from the COVID-19 shock.

Figure 4: Output per worker (OPW) calculated using LFS vs RTI + SE QoQ Growth (%) for Q1 2015 – Q1 2019 and Q3 2021 – Q1 2026. Data Source: Office for National Statistics, Own elaboration by TPI Productivity Lab

Figure 5: Output per Hour (OPH) calculated using LFS vs RTI + SE QoQ growth (%) for Q1 2015 – Q1 2019 and Q3 2021 – Q1 2026. Data Source: Office for National Statistics, Own elaboration by TPI Productivity Lab

As Figures 4 and 5 show, while the two methodologies produce noticeably different point estimates, the overall trends remain broadly consistent. However, the divergence between the two measures has increased steadily over the past year.

Discussion

The latest figures indicate that UK real GDP expanded by 0.6% in the first quarter of 2026, significantly stronger than in the previous three quarters, suggesting a tentative recovery. However, looking at previous years, there appears to be a pattern of strong first-quarter performance followed by weaker growth in subsequent quarters. This is illustrated in Figure 6, which shows quarterly growth across the UK economy between Q1 2023 and Q1 2026, highlighting the pattern of fragility.

Figure 6: Gross domestic product at market prices, chained volume measure, Q1 2023 to Q1 2026. Data Source: Office for National Statistics, Own elaboration by TPI Productivity Lab

According to the ONS, services were the main driver of this quarter’s GDP growth, with a growth of 0.8%. Of the 14 subsectors that comprise the services industry, 11 contributed positively to growth during this period

The effects of the war in Iran are not yet fully reflected in GDP figures, although slower growth is expected in subsequent quarters. The IMF has already revised down its UK growth forecasts, with some projections suggesting the UK may be among the more exposed developed economies to the economic effects of the conflict.

OECD data show the UK had the highest GDP growth in Q1 amongst the G7. Japan and the US followed closely, both behind at 0.5% growth, while Italy and France lagged at 0.2% and 0.0%, respectively. This data is illustrated in Figure 7. It shows Q1 GDP growth for the G7 nations, as well as aggregates for the total G7, the OECD, the Euro Area and the European Union.

* indicates that data is provisional at the time of publication

Figure 7: Q1 2026 GDP Growth by Country, quarter-on-quarter, chain linked volume. Data Source: OECD, Own elaboration by TPI Productivity Lab

Regarding the labour market, unemployment has continued to rise, reaching 5% across the UK, while job vacancies have fallen by 3.9% to their lowest level since April 2021.

Research by the Institute for Fiscal Studies shows the share of young people not in education, employment or training (NEET) has risen notably from 10.8% (760,000) in 2022 to 12.8% (960,000). Over the same period, the share of people aged between 16-24 in employment has fallen from 54.9% to 50.6%. These labour market developments may present longer-term risks to productivity growth, particularly if lower labour market participation among younger workers persists.

Overall, while Q1 2026 recorded stronger productivity and GDP growth than in recent quarters, the broader trend since 2023 suggests that UK productivity performance remains weak and volatile rather than on a clear upward trajectory. The recent figures may indicate a short-term recovery, but frequent fluctuations in quarterly productivity growth limit the evidence of sustained, long-term improvement.