The UK Services Sector, Productivity Change and the Recession in Long-Term Perspective

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Abstract
The decline of manufacturing and rise of services, including the public sector, has been a matter of concern in Britain. Several aspects of this issue are explored in this paper by estimating productivity growth in services relative to other sectors, taking all inputs into account and by placing the recent growth of services into a long-term historical perspective. An important feature of the analysis is an attempt to allow for the difficulties of measuring service sector output. By recalculating productivity growth with revised output estimates, it is found that, apart from periods of depression, secular productivity growth in services approximates that in manufacturing, and that the recent performance of services is characteristic of depression rather than of longer-term productivity trends.

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