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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

Using the statutory minimum could be defensible for the growth rate, but is probably further from the level than what the ONS has chosen to do.

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

So the new ONS methodology is definitely wrong on this part - in a way that definitely flatters the level of productivity and possibly growth too. But imo it's far closer to the truth than the previous methodology.

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

I saw that piece and agree that the annual leave part is definitely the weakest part of the new methodology. There doesn't seem to be good data on leave taken, but what I have seen suggests 25 days is about the right level (e.g. Expedia surveys) with not much change over time.

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

One thing that hopefully doesn't get lost is the fantastic work that the ONS have done here. The methodology behind the new estimates is very impressive. And the comms around them have been clear and admirably transparent. Well worth reading their release. www.ons.gov.uk/economy/econ...

ons.gov.uk

Component approach to measuring labour productivity, UK: 1997 to 2024 - Office for National Statistics

An assessment of the methods and impacts of the new component approach to labour productivity measurement in the UK. These are not official statistics.

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

In any case, this is all probably too late have any bearing on next month's Budget. The new measures will be pored over in time, but the questions they raise for the Government and official forecasters are already hard to ignore. www.resolutionfoundation.org/publications...

resolutionfoundation.org

Revision of labour • Resolution Foundation

The UK’s post-financial crisis productivity slowdown has been a defining feature of our economic landscape.[1] But changes in how the Office for National Statistics (ONS) calculates the average hours ...

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

It also raises questions for the OBR, which cited Britain's recent productivity data when it downgraded its economic forecast last year. Its latest assumption for productivity growth looks more pessimistic in light of the new data (but its assumption of slowly falling hours looks more optimistic).

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

It's too early to say definitively why this is the case. But it's probably not as simple as workers choosing to bank the proceeds of (often meagre) wage growth by working less. Many workers struggle to get as many hours as they'd like.

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

This data raises questions for the Government, as it now shows average hours falling by 5% since 2007.

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

The ONS's revisions are driven purely by hours worked: productivity has been revised up because we are producing the same output with fewer hours. Why? Because we're on annual leave more than previously thought. The LFS was undercounting leave, and increasingly so over time.

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

But it doesn't change the fact that we are much less productive than our peers. On the new estimates, French workers produce 10% more per hour than Brits, while Germans produce 20% more. The OECD's own productivity estimates already showed this. The ONS is now in line with those.

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

A core part of diagnosing Britain's malaise is that our post-2007 slowdown in productivity growth was much worse than our peers. That may no longer be true. New ONS data suggests we actually had the *second-fastest* rate of productivity growth in the G7 between 2007 and 2019.

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Simon Pittaway @simonpittaway.bsky.social · 25/09/2026

@hannahslaughter.bsky.social and I have just published our take on the ONS's new productivity estimates. They don't change the unavoidable reality of UK economic stagnation, but they do challenge the consensus on its causes. A short summary ⤵️

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Simon Pittaway @simonpittaway.bsky.social · 31/07/2026

Thankfully, this is already on the Government's radar. Designing a credible system for rebalancing funding really is key. For growth incentives to work, mayors need to know the rules of the game *and* believe they are fair enough to stand the test of time. www.gov.uk/government/p...

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Simon Pittaway @simonpittaway.bsky.social · 31/07/2026

But sharper growth incentives need to be balanced with managing the risk of wider gaps between regions. Had mayors kept a share of Income Tax since 2010, that part of funding would have grown much more in London than anywhere else. That's much more regional variation than we've seen in practice.

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Simon Pittaway @simonpittaway.bsky.social · 31/07/2026

This is a sensible step that builds on (and potentially accelerates) plans laid out by the previous administration. In March, Rachel Reeves announced that a roadmap for fiscal devolution would be published at the this year's Budget, with Income Tax a priority. www.gov.uk/government/s...

gov.uk

Mais Lecture 2026

On 17 March 2026, the Chancellor Rachel Reeves gave the Mais lecture at Bayes Business School.

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Simon Pittaway @simonpittaway.bsky.social · 31/07/2026

Today, the Government gave us the first real details of its plans for devolution. The headline measure is letting mayors keep a slice of Income Tax raised in their areas, in an effort to sharpen their incentives to grow. www.gov.uk/government/n...

gov.uk

PM hands mayors share of income tax to make lives better in every postcode

The Prime Minister will today launch the biggest transfer of power from Westminster in a generation, giving communities greater control over the decisions that shape jobs, transport, housing and publi...

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Simon Pittaway @simonpittaway.bsky.social · 21/05/2026

The UK's run of feel-good economic data came to an abrupt end this morning. The flash composite PMI index for May suggests private-sector activity shrank on the month. Worryingly, this happened despite pre-emptive buying propping up manufacturing. Services shrank at the fastest rate since 2021.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

This bleak picture calls for a clear-eyed and serious reset in Britain's approach to economic and fiscal policy. Tune in to our event later this morning to hear what we think needs to happen www.resolutionfoundation.org/events/secon...

resolutionfoundation.org

Second half comeback? • Resolution Foundation

The Labour Government has had a bruising start to the Parliament. It is trailing badly in the polls and is expecting a battering in the local, Welsh and Scottish elections in early May. Another relaun...

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

The outlook for the year ahead is bleak. But it's also worth remembering where we are starting from here. GDP per capita has hardly grown since the pandemic. We are now 6% poorer than if we'd simply kept growing at our (historically not great) pre-pandemic average.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

But businesses are downbeat about the year ahead. Implied real-terms sales growth in the April DMP survey hit its lowest level since September 2022.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

Nonetheless, the PMIs indicated strong economic activity in April. But this was seemingly due to pre-emptive stockpiling by businesses, which is likely to fall away. resolutionfoundation.substack.com/p/good-data-...

resolutionfoundation.substack.com

Good data in hard times

Simon Pittaway reflects on the puzzling arrival of good economic news in the midst of a global energy shock.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

Enough about the past. What does more timely data say about the year ahead? First, households are getting jittery. The GfK consumer confidence is plummeting, and in April fell to its lowest level since October 2023.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

This is already raising mortgage rates and borrowing costs for businesses too. This will hit spending and, more worryingly for growth, business investment. resolutionfoundation.substack.com/p/why-your-m...

resolutionfoundation.substack.com

Why your mortgage bill is paying the price for market nerves

Simon Pittaway digs into the data to figure out why mortgage rates are rising, even as the Bank of England holds off on rate rises.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

However, where the UK does stick out is on interest rates. A combination of pre-existing sensitivity to global news and renewed political uncertainty have pushed up rates by more than anywhere in the G7 since the Iran war began.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

There’s a small silver lining here, though. When it comes to energy prices, gas is the thing that UK households are especially exposed to. The global energy shock is becoming more oil-heavy than gas-heavy, so the UK is less uniquely exposed than it looked a couple of months ago.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

The ongoing conflict in the Middle East continues to drive up oil and gas prices, which will raise inflation and hit real incomes. Higher inflation looks set to cost hit typical working-age household income by £550 this financial year.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

Aside from the mechanics of producing seasonally adjusted GDP, there are two real reasons why we’d expect growth to slow later this year: the Iran war and political uncertainty.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

On this point, the ONS has put out a helpful blog on its approach to seasonal adjustment. The timing of economic activity does seem to have changed post-pandemic and it is hard to adjust for this in real time. No smoking gun here so let’s see how things evolve. blog.ons.gov.uk/2026/05/14/h...

blog.ons.gov.uk

How we adjust GDP to remove seasonal effects

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

As in 2024 and 2025, there is a big divergence between the Q1 GDP data and other indicators of economic activity. The Bank of England has done some great work on this: they think the combined signal from other data suggests more modest 0.2% growth in Q1 - well below the ONS's headline figure.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

Unfortunately, this strong quarterly growth is unlikely to last, as has been the case in recent years. In each year since 2022, GDP growth has peaked in Q1 and declined throughout the year.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

Across sectors, Q1 growth was broad-based. All three of services, production and construction grew for the first time since Q1 2025. Services were particularly strong, with 11 of 14 sub-sectors growing on the quarter.

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

Solid growth in Q1 was largely expected after February’s monthly GDP data came in well above expectations. But the economy also grew by an unexpected 0.3% in March (although partly driven by to February GDP being revised down).

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Simon Pittaway @simonpittaway.bsky.social · 14/05/2026

The UK economy grew by 0.6% in Q1 2026, according to data released by the ONS today. This continues a trend of strong Q1 data post-pandemic, which has previously petered out in later quarters. Given high energy prices and interest rates, don’t be surprised if that happens again in 2026. 🧵

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Simon Pittaway @simonpittaway.bsky.social · 12/05/2026

I've been writing about interest rates (again) for the RF Substack.

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Simon Pittaway @simonpittaway.bsky.social · 01/04/2026

Interesting from today's FPC record: the recent rise in mortgage rates reflects lenders facing higher funding costs rather than wider spreads. So far at least, it's not a classic credit crunch for mortgagors - just an unwelcome repricing for those looking to take out a loan (inc. yours truly!)

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Simon Pittaway @simonpittaway.bsky.social · 26/03/2026

Starter Deposit: a government loan of up to 5% on a first home - not limited to new builds, no buyer deposit required, price caps low. Those without savings, paying more in rent than they would on a mortgage, could save £2,600 a year through this scheme. 👇 buff.ly/0OaFqsX

buff.ly

Credit where credit's due? • Resolution Foundation

Almost half of Britain’s 8.3 million potential first-time buyers earn enough for a mortgage on a starter home, but just 11 per cent have enough saved for a deposit. A targeted equity-loan scheme is th...

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Simon Pittaway @simonpittaway.bsky.social · 26/03/2026

So what *would* help? Long term: build more homes. It’s the only sustainable route to affordability. Short term: A highly targeted Starter Deposit scheme for the 1.1m who could afford repayments but lack savings.

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Simon Pittaway @simonpittaway.bsky.social · 26/03/2026

Second, there's a good chance it wouldn't even help. Inelastic housing supply in the UK means that more credit = higher house prices, not more homeownership.

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Simon Pittaway @simonpittaway.bsky.social · 26/03/2026

Some say the answer is looser mortgage regulation. We say no for two reasons. First, this would increase financial stability risks. As per the chart below, FTBs are already spending a historically large share of their income on mortgage repayments.

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Simon Pittaway @simonpittaway.bsky.social · 26/03/2026

Why? Because house prices have outpaced earnings for decades. A typical buyer needs to save 5% of their income (after tax & housing) for 5 years for a 5 per cent deposit. 1.7 million would have to save for more than a decade. No wonder a third of FTBs get help from their parents.

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Simon Pittaway @simonpittaway.bsky.social · 26/03/2026

Almost half of potential buyers have a high enough income to pass the banks tests for a mortgage, but only 15% have the savings for even a 5% deposit.

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Simon Pittaway @simonpittaway.bsky.social · 26/03/2026

We've identified 8.3 million potential first time buyer families and tested whether they can access a mortgage for a starter home in their region. They face three hurdles: • a 5% deposit • loan to income limits • affordability stress tests The deposit now presents the biggest barrier.

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Simon Pittaway @simonpittaway.bsky.social · 26/03/2026

🏠 New report out today from me, @jamessmithrf.bsky.social and Hannah Aldridge 🏠 We dig into whether financial regulation is holding back young people’s dreams of owning a home — and what policymakers should actually do to help 🧵⤵️ buff.ly/0OaFqsX

buff.ly

Credit where credit's due? • Resolution Foundation

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Simon Pittaway @simonpittaway.bsky.social · 05/02/2026

The MPC's 5-4 split today continued a rising tide of dissenting votes from internal BoE members. Last year, one-in-five votes cast by internals went against the majority decision - the highest rate of internal dissent since 2005. This is good! A sign of active debate among the committee.

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Simon Pittaway @simonpittaway.bsky.social · 05/02/2026

The dovish surprise in today’s vote – with 4 members voting for a cut, rather than the expected 2 – signals an increased chance of future cuts. The dovish case is clear in the forecasts too (see charts ⬇️). If these signs of weakness continue, the case for more rate cuts will only grow.

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Simon Pittaway @simonpittaway.bsky.social · 05/02/2026

What does all this mean for interest rates? Since the MPC’s last meeting, markets have raised and then scaled-back their expectations for rate cuts this year. Nearly two cuts were priced in around mid-January. But in recent days the odds of a second cut were around half.

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Simon Pittaway @simonpittaway.bsky.social · 05/02/2026

In the long run, real wage growth can only be sustained if productivity is growing too. Here, the Bank still expects a gradual recovery in productivity growth. Looking ahead, it appears marginally more optimistic than the OBR – but note that the OBR thinks potential output is higher today.

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Simon Pittaway @simonpittaway.bsky.social · 05/02/2026

Unchanged wage growth + less inflation = stronger real wages. The Bank projects more than twice as much real pay growth in the next three years (3.5%) as the OBR does over the next five (1.6%). If the Bank is right, that's a much rosier outlook for living standards.

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Simon Pittaway @simonpittaway.bsky.social · 05/02/2026

The backdrop here is pay growth appearing to settle around 3% in recent data - traditionally a level consistent with 2% inflation target. If it holds, it should give space for quicker cuts. Indeed, the two surprise voters for a cut (Breeden & Ramsden) both cited this in their reasoning.

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Simon Pittaway @simonpittaway.bsky.social · 05/02/2026

On wage growth, the Bank’s near-term forecast for private-sector regular pay is basically unchanged in the near term: it still sees AWE easing to around 3.2% by the second quarter of this year.

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