The output per hour worked in the UK was 20% below the average for the rest of the G7 countries in 2014, compared with 17% one year earlier.
This is the widest productivity gap since 1991 (18% compared with the 7% gap for the rest of the G7), according to new figures from the Office for National Statistics.
The UK was 33% less productive than Germany even though Germans work fewer hours, and also lagged behind France and the US.
Of the G7 countries, only Japan’s productivity is worse than the UK.
ONS chief economist Joe Grice said, “These figures show UK productivity continues to lag behind other developed economies. Since the economic downturn productivity growth has slowed in most developed economies, but by more in the UK than the average.”
Meanwhile, James Sproule, chief economist at the Institute of Directors, said, “In the era of major technological change, we should arguably be focusing more on ‘agility’ than ‘productivity’.”
Sproule said bigger companies tend to be more productive, but the economy of the future looks set to be dominated not by big companies but by “fast, agile, quick-moving and reactive ones.
“The firms that can respond to consumer demands most effectively and bring new products and services to market will reap the rewards.”
However, he added said the UK could learn some lessons from the US by creating a closer collaboration with universities, businesses and investors.
Increasing UK productivity to match that of the US would boost the UK GDP by 31%, the equivalent of £21,000 per household per year. Even an increase of 0.1% would result in the UK economy being £35bn larger by 2030.
George Osborne set out a new plan for UK productivity recently and said that improving it is “the challenge of our time”.